Table $5.5$ You Are the Operations Manager of a Firm That Uses

question 77

Multiple Choice

Table $5.5$
You are the operations manager of a firm that uses the continuous review inventory control system. Suppose the firm operates 52 weeks a year and has the following characteristics for its primary item:


-Use the information in Table 5.5. What safety stock level provides a 95 percent cycle- service level?

• A) less than or equal to 150 units
• B) greater than 150 but less than or equal to 200 units
• C) greater than 200 but less than or equal to 250 units
• D) greater than 250 units

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Definitions:

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Cost

A cost that varies with the level of output or sales, such as materials and labor directly involved in production.

Measure Of Activity

A quantifiable metric used to assess the level of operation or output, often tied to performance or productivity evaluation.

Variable Cost

Charges that fluctuate based on the quantity of output or level of sales.