Table 56
Peterson Enterprises Uses a Continuous Review Inventory Control System

question 2

Multiple Choice

Table 5.6
Peterson Enterprises uses a continuous review inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item:
Demand $= 50,000$ units $/$ year
Ordering cost $= \$ 35 /$ order
Holding cost $= \$ 2 /$ unit $/$ year
Lead time $= 3$ weeks
Standard deviation in weekly demand $= 125$ units
You will need to refer to a normal table to answer the question(s) .
-Use the information in Table 5.6. If Peterson wishes to provide a 90 percent cycle- service level, what is the reorder point?

• A) less than or equal to 2700 units
• B) greater than 2700 but less than or equal to 3100 units
• C) greater than 3100 but less than or equal to 3500 units
• D) greater than 3500 units

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Definitions:

Equilibrium Prices

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Total Utility

Differentiated per your instruction, total utility quantifies the complete satisfaction received by a consumer from consuming various amounts of a good or service.

Marginal Utility Data

Information related to the additional satisfaction or benefit a consumer receives from consuming one more unit of a good or service.

Utility-Maximizing

The economic principle that assumes individuals seek to achieve the highest level of satisfaction or utility from their consumption decisions.