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

question 174

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 total cost (ordering and carrying) if the company orders the economic order quantity for this item?

• A)less than or equal to $3,000
• B)greater than $3,000 but less than or equal to $3,200
• C)greater than $3,200 but less than or equal to $3,400
• D)greater than $3,400