Scenario 9.7 You Are the Operations Manager of a Firm That Uses

question 120

Multiple Choice

Scenario 9.7
You are the operations manager of a firm that uses the continuous-review inventory control system.Suppose the firm operates 52 weeks a year,365 days,and has the following characteristics for its primary item:
Demand = 25,000 units/year
Ordering cost = $30/order
Holding cost = $8/unit/year
Lead time = 2 weeks
Standard deviation in weekly demand = 100 units
A normal distribution table is appended to this exam.
-Use the information in Scenario 9.7.If the company desires a 95% service level,how many times per year will they stock out if they order the economic order quantity each time?

• A)less than or equal to 3 times
• B)greater than 3 times but less than or equal to 4 times
• C)greater than 4 times but less than or equal to 5 times
• D)greater than 5 times

---

Definitions:

Common Heritage

Common heritage refers to cultural, historical, or natural assets that are considered to be of importance to humanity as a whole, often protected and preserved for future generations.

Englishmen

Refers to individuals from England, highlighting their cultural, historical, or national identity.

Act Concerning Religion

Also called the Maryland Toleration Act of 1649, it was one of the first laws imposing a degree of religious freedom in the British American colonies.

Jewish People

An ethnoreligious group originating from the Israelites or Hebrews of the ancient Middle East, sharing a common heritage, religion (Judaism), and cultural identity.