Exhibit 12.3 The Following Questions Use the Information Below

question 30

Multiple Choice

Exhibit 12.3
The following questions use the information below.
An auto parts store wants to simulate its inventory system for engine oil. The company has collected data on the shipping time for oil and the daily demand for cases of oil. A case of oil generates a $10 profit. Customers can buy oil at any auto parts store so there are no backorders (the company loses the sale and profit) . The company orders 30 cases whenever the inventory position falls below the reorder point of 15 cases. Orders are placed at the beginning of the day and delivered at the beginning of the day so the oil is available on the arrival day. An average service level of 99% is desired. The following spreadsheets have been developed for this problem. The company has simulated 2 weeks of operation for their inventory system. The current level of on-hand inventory is 25 units and no orders are pending.
-Using the information in Exhibit 12.3, what formula should go in cell J8 to determine the arrival date for an order?

• A) =IF(I8=0,0,A8+I8)
• B) =IF(I8=0,0,A8+1+I8)
• C) =IF(I8=1,0,A8+1+I8)
• D) =IF(I8=0,A8+1+I8,0)

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Definitions:

M1 Money Supply

The total money supply that includes cash and liquid assets that are easily convertible into cash, such as demand deposits.

Monetary Policy

Actions undertaken by a central bank, such as the Federal Reserve, to control the money supply and interest rates to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.

Federal Open Market Committee

The branch of the Federal Reserve System responsible for setting national monetary policy and interest rates.

Reserve Requirement

The minimum amount of deposits that a bank must hold in reserve and not lend out, which is set by the central bank as a means to control the money supply.