Your Firm Uses a Continuous Review System (Q System),where the Inventory

question 176

Multiple Choice

Your firm uses a continuous review system (Q system) ,where the inventory position is updated after every transaction.The firm operates 52 weeks per year.One of the items has the following characteristics:
Demand = 14,560 units per year
Ordering cost = $40 per order
Holding cost = $6 per unit per year
Lead time = 2 weeks
Standard deviation in weekly demand = 100 units
Cycle-service level = 80 percent
If Q is made equal to the EOQ,what are the desired values for Q and R?

• A) Q is between 65 and 69, and R is between 398 and 402.
• B) Q is between 65 and 69, and R is between 362 and 366.
• C) Q is between 439 and 443, and R is between 678 and 682.
• D) Q is between 439 and 443, and R is between 559 and 563.

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