The Cosmopolitan Store Wants to Use a Periodic Review System

Multiple Choice

The Cosmopolitan store wants to use a periodic review system for its basic apparel product. The product has an annual demand of 7,200 units. Their order cost is $75, and their inventory carrying cost is 18% per dollar per year. The cost of each product is $20. The purchase order lead time is 1 week, and the average daily demand is 18 units, with a standard deviation of 4 units. Cosmopolitan would like to maintain a 99% service level.
-Calculate the order quantity, based on the target inventory level computed in Question 42 and if the current inventory level is 350 units when Cosmopolitan conducts the review.

A) 356 units
B) 373 units
C) 366 units
D) 316 units
E) 198 units