Wong enterprises used continuous review system

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Reference no: EM132264620

1. Wong Enterprises used a Continuous Review System (i.e., Q System) for controlling inventory for a specific end-item. The firm operates 5 days per week and 52 weeks a year and the end-item has the following characteristics:

Demand (D) = 20,020 units/year

Ordering Costs (S) = $40/order

Holding Costs = $1/unit/six months

Leadtime (L) = 10 days

Cycle Service Level = 94.95%

Assume that Demand is normally distributed; with Standard Deviation of weekly demand = 100 units.

Current on-hand inventory is 1040 units, with no scheduled receipts and no backorders.

1. The EOQ for this item is:

More than 850 but less than or equal to 860

More than 860 but less than or equal to 870

More than 870 but less than or equal to 880

More than 880 but less than or equal to 890

More than 890

2. The average time, P (in weeks), between orders is: (round to the nearest week)

Less than or equal to 1 week

More than 1 week but less than or equal to 2 weeks

More than 2 weeks but less than or equal to 3 weeks

More than 3 weeks

None of the above

3. The safety stock for the Q system is:

More than 225 but less than or equal to 230

More than 231 but less than or equal to 236

More than 237 but less than or equal to 242

More than 243 but less than or equal to 248

None of the above

4. The safety stock for the P system is:

More than 340 but less than or equal to 345

More than 346 but less than or equal to 351

More than 352 but less than or equal to 357

More than 358 but less than or equal to 363

None of the above.

5. The reorder point, R, in the Q system is (in units):

More than 800 but less than or equal to 850

More than 850 but less than or equal to 900

More than 900 but less than or equal to 950

More than 950 but less than or equal to 1,000

None of the above

Reference no: EM132264620

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