Multiple Choice
Scenario 9.5
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.A normal distribution table is appended to this exam.
-Use the information in Scenario 9.5.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%
Correct Answer:
Verified
Correct Answer:
Verified
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