Use the Following to Answer the Questions Below

question 144

Multiple Choice

Use the following to answer the questions below.
Shipments of Product X from a plant to a wholesaler are made in lots of 600.The wholesaler's average demand for X is 100 units per week.Lead time from plant to wholesaler is 4 weeks.The wholesaler pays for the shipments when they leave the plant.
-Refer to the instruction above.If the plant reduces its lead time from 4 to 2 weeks and keeps its 600 unit lot size,what is the wholesaler's new total cycle plus pipeline inventories?

• A)300 units
• B)500 units
• C)700 units
• D)200 units

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Definitions:

Inventory Levels

The quantity of goods or materials a company has available at any given time, crucial for meeting customer demand and optimizing production.

Variable Costing

An accounting method in which fixed manufacturing overhead costs are not allocated to products, affecting stock valuation and profitability reporting.

Manufactured Quantity

Manufactured quantity refers to the total number of units produced by a company during a specified period.

Absorption Costing

A financial recording technique that encompasses all production expenses, such as raw materials, direct labor, and variable as well as fixed overheads, into the pricing of a product.