Scenario 9.8 Peterson Enterprises Uses a Continuous Review Inventory Control System.The Firm

Scenario 9.8
Peterson Enterprises uses a continuous review inventory control system.The firm operates 50 weeks per year and has the following characteristics for an item:
Demand = 50,000 units/year
Ordering cost = $35/order
Holding cost = $2/unit/year
Lead-time = 3 weeks
Standard deviation in weekly demand = 125 units
A normal distribution table is appended to this exam.
-Use the information in Scenario 9.8.If Peterson wishes to provide a 90% cycle-service level,what is the reorder point?

A) less than or equal to 2,700 units
B) greater than 2,700 but fewer than or equal to 3,100 units
C) greater than 3,100 but fewer than or equal to 3,500 units
D) greater than 3,500 units

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free