Scenario 9.12 Demand = 100,000 Units/year

Multiple Choice

Scenario 9.12
Demand = 100,000 units/year
Number of days per year = 250 weeks
Standard deviation of weekly demand = 50 units
Average lead time = 5 days
Standard deviation of lead time: 2 days
Cycle-service level = 99%
A continuous review system is used to control inventory.
-Use the information in Scenario 9.12. If the firm decides to reduce its cycle-service level to 95%, what is the new reorder point if all other parameters remain the same for this product?

A) greater than 4,500 units
B) greater than 3,500 units but less than or equal to 4,500 units
C) greater than 2,500 units but less than or equal to 3,500 units
D) greater than 1,500 units but less than or equal to 2,500 units
E) greater than 0 but less than or equal to 1,500 units