Use the Following to Answer the Questions Below

question 65

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 shipment lot size from 600 to 400 units and keeps its 4 week lead time,what is the wholesaler's new total cycle plus pipeline inventories?

• A)600 units
• B)300 units
• C)500 units
• D)400 units

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Definitions:

Service Departments

Units within an organization that support other departments but do not directly contribute to revenue generation, such as IT and HR.

Profit Margin

A financial ratio indicating the percentage of revenue that remains as profit after accounting for the cost of goods sold and other expenses; a measure of profitability.

Investment Turnover

A financial ratio that measures the efficiency of a company in generating sales from its investments in securities or fixed assets.

Return On Investment

A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of several different investments.