Scenario 9.7 Cranium, Inc., Purchases Term Papers from an Overseas Supplier Under

question 190

Multiple Choice

Scenario 9.7
Cranium, Inc., purchases term papers from an overseas supplier under a continuous review system. The average demand for a popular mode is 300 units a day with a standard deviation of 30 units a day. It costs $60 to process each order and there is a five-day lead-time. The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level. Cranium operates 200 days per year.
-Use the information in Scenario 9.7. What service level does a reorder point of 1,524 imply?

• A) less than or equal to 50%
• B) greater than 50% but less than or equal to 55%
• C) greater than 55% but less than or equal to 60%
• D) greater than 60%

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Definitions:

Breach Of Contract

Occurs when one or more parties involved in a binding agreement fail to fulfill their obligations as outlined in the contract, potentially resulting in legal actions.

Intrusion On Solitude

A legal term referring to a situation where an individual's privacy is invaded without their consent, typically through physical or electronic means.

Conversion

The unauthorized act of taking someone else's property and using or treating it as one's own, thereby infringing on the owner's rights.

Dominion

Supreme authority or control over property or territory.