Scenario 9.9 Demand = 5,200 Units/year

question 55

Multiple Choice

Scenario 9.9
Demand = 5,200 units/year
Standard deviation of weekly demand = 11 units
Ordering costs = $45/order
Holding costs = $2/unit/year
Cycle-service level = 90% (z for 90% = 1.28)
Lead-time = 3 weeks
Number of weeks per year = 52 weeks
-Use the information in Scenario 9.9.The firm decided to change to the periodic review system to control the item's inventory.For the most recent review,an inventory clerk checked the inventory of this item and found 500 units.There were no scheduled receipts at the time.How many units should be ordered? (HINT: Use the EOQ model to derive P,the time between reviews. )

• A)0 units
• B)greater than 0 but less than or equal to 300 units
• C)greater than 300 but less than or equal to 600 units
• D)greater than 600 units

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Definitions:

Liquidation

The process of closing a business and distributing its assets to claimants, typically when the company is insolvent.

Noncash Assets

Noncash Assets are assets that are physical or intangible properties owned by a company that are not in the form of cash or easily convertible into cash.

Income Ratios

Financial metrics that compare different aspects of a company's income to its revenues, expenses, or other financial metrics, to assess its profitability.

Liabilities

Financial obligations or debts owed by a business to another entity that are expected to be settled through the transfer of assets, provision of services, or other economic benefit.