Scenario 9.6 a Company Operating Under a Continuous Review System Has an Has

question 211

Multiple Choice

Scenario 9.6
A company operating under a continuous review system has an average demand of 50 units per week for the item it produces.The standard deviation in weekly demand is 20 units.The lead-time for the item is six weeks,and it costs the company $30 to process each order.The holding cost for each unit is $10 per year.The company operates 52 weeks per year.A normal distribution table is appended to this exam.
-Use the information in Scenario 9.6.What is the desired safety stock level if the company has a policy of maintaining a 90% cycle-service level?

• A)less than or equal to 50 units
• B)greater than 50 but less than or equal to 100 units
• C)greater than 100 but less than or equal to 150 units
• D)greater than 150 units

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