Describes regulatory arbitrage

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Reference no: EM132169768

1. Icy Snowmobile, Inc., has an annual demand for 1,200 snowmobiles. Their purchase cost for each snowmobile is $2,500. It costs about $250 to place an order, and the holding rate is 35 percent of the unit cost.

a. The economic order quantity is _____. (Round your answer to the nearest whole unit.)

b. The annual holding cost is $ _____. (Round your answer to the nearest dollar.)

c. The annual ordering cost is $ _____. (Round your answer to the nearest dollar.)

d. The annual total inventory cost is $ ___. (Round your answer to the nearest dollar.)

2. Which of the following describes regulatory arbitrage?

a. Finding a way of reducing capital requirements without changing the risks being taken

b. Buying products that are not subject to regulation

c. Shorting products that are not subject to regulation

d. Trading with the government

3. Lindner Congress Bookstore sells a unique calculator to college students. The demand for this calculator has a normal distribution with an average daily demand of 15 units and a standard deviation of 4 units per day. The lead time for this calculator is very stable at five days.

a. The standard deviation of demand during lead time for a 95% service level is ________. (Note: Round the square root to the two decimal points, 0.00 and round your final answer to the nearest 0.0.)

b. The safety stock for a 95% service level is _____. (Note: Round the square root to the two decimal points, 0.00 and round your final answer to the nearest 0.0.)

c. The statistical reorder point for a 95% service level is ______. (Round your answer to the nearest 0.0.)

Reference no: EM132169768

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