Expected profit is direct measure of how well company serves

Reference no: EM131780476

1. Store A purchases cases of fertilizer for its lawn-care business from a supplier who charges Store A $30 per order and $50 per case. Each case consists of five bags of fertilizer. Store A needs 2000 bags of fertilizer a year. Store A’s annual holding costs are 30%. If Store A’s order quantity is 40 cases, what is its average inventory level?

A. 89

B. 45

C. 40

D. 20

2. A critical ratio of 0.8 means there is an 80% chance that demand is less than or equal to the optimal order quantity. True or False?

3. Expected profit is a direct measure of how well a company serves its customers. True or False?

4. Bakery A sells bread for $2 per loaf that costs $0.50 per loaf to make. Bakery A gives a 70% discount for its bread at the end of the day. What is the salvage value of its bread?

A. $2.00

B. $0.60

C. $0.50

D. $0.10

Reference no: EM131780476

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