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

question 159

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.What is the reorder point for this item if they use a 95% service level?

• A)1,046 units
• B)170 units
• C)1,194 units
• D)68 units

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Definitions:

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