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In: Operations Management

1. A company operating under a continuous review system has an average demand of 50 units...

1. A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead-time for the item is six weeks, and it costs the company $30 to process each order. The holding cost for each unit is $10 per year. The company operates 52 weeks per year. Use the Z-table (normal distribution table) that I posted in the inventory folder. Q2) What is the desired safety stock level if the company has a policy of maintaining a 90% cycle-service level?
A. Approximately 63 units
B. Approximately 48 units
C. Approximately 34 units
D. Approximately 57 units

2. A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead-time for the item is six weeks, and it costs the company $30 to process each order. The holding cost for each unit is $10 per year. The company operates 52 weeks per year. Use the Z-table (normal distribution table) that I posted in the inventory folder. Q3) What is the reorder point if the company finally decides to implement a 95 percent cycle-service level?
A. 380
B. 335
C. 425
D. 260

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keosha answered 5 months ago
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