Kelly Opens an Aquarium Store in a Lively Shopping Mall

Multiple Choice

Kelly opens an aquarium store in a lively shopping mall and finds business to be booming, but she often stocks out of key items customers want. She decides to experiment with inventory control methods such as using a fixed order quantity (FQS) and/or fixed order period (FPS) systems. The Fluval 303 pump, a high margin and profitable pump, is one of her best sellers, but it stocks out frequently. She collects the following data about the pump's sales.
$\begin{array} { l l } \text { Demand } = 10 \text { units per week } & \text { Store operates } 45 \text { weeks } / \text { year } \\\text { Order cost } = \$ 30 / \text { order } & \text { Lead time } = 3 \text { weeks } \\\text { Item cost } = \$ 80 / \text { pump } & \text { Standard deviation of weekly demand } = 4 \text { units } \\\text { Inventory-holding cost } = 15 \% \text { per year } & \text { Desired service level } = 90 \text { percent }\end{array}$
-The reorder point with safety stock rounded to the next highest whole number is:

A) less than 15 pumps.
B) more than 15 but less than or equal to 25 pumps.
C) more than 25 but less than or equal to 40 pumps.
D) more than 40 pumps.