Scenario 9.10 the Dolly Llama Farm Keeps an Average of 50 of 50

question 199

Multiple Choice

Scenario 9.10
The Dolly Llama Farm keeps an average of 50 of those funny creatures on hand and each consumes a pound of grain a day, 365 days per year. Grain costs $12 for a 50 pound bag and it costs the farm $10 to make a run to the feed store to pick up an order, regardless of order size. It takes the feed store four days to acquire, mix, and bag the special blend of grains necessary to make the feed the Dolly Llama Farm prefers. Storage costs for the feed runs 15% of the unit cost as the cost of money, loss due to critters, and spoilage all add up.
-Refer to Scenario 9.10. The actual usage for grain depends on which llamas show up at feeding time, thus there is an average need for 50 pounds of grain each day with a standard deviation of five pounds. The farm is willing to tolerate a 5% chance of running out of feed before they can get some more hauled in. The llamas would prefer a 0% chance, but they don't get a vote. What reorder point achieves the farm's objectives?

• A) 4.32 bags
• B) 5.16 bags
• C) 6.28 bags
• D) 7.80 bags

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Definitions:

Confirmation Bias

The inclination to seek out, understand, prefer, and remember details in a manner that validates one's existing opinions or theories.

Sunk Cost Effect

The phenomenon where a person continues an endeavor because of previously invested resources (time, money, or effort), despite potential losses.

Availability Heuristic

The availability heuristic is a mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision.

Confirmation Bias

Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses.