Scenario 9.5 Cranium,Inc. ,Purchases Term Papers from an Overseas Supplier Under a Under

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 combination of changes in lead-time and service level would result in exactly the same level of safety stock as indicated in the table?

A) Lead-time drops to 41 days and service level increases to 99%.
B) Lead-time increases to 18.52 days and service level drops to 92%.
C) Lead-time increases to 20.54 days and service level drops to 90%.
D) Lead-time drops to 3.5 days and service level increases to 99.54%.

Correct Answer:

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