A business holds an inventory item with an economic order quantity of 800 units.
Posted: Mon Mar 07, 2022 8:35 am
A business holds an inventory item with an economic order quantity of 800 units. Supply lead times and usage rates for the item are as follows:
MaximumAverageMinimum -
Supply lead time20 days12 days6 days
Daily usage25 units20 units10 units
The business wishes to avoid any risk of running out of this inventory item.
What is the size of the buffer inventory (using average figures) and the maximum level of inventory?
A. Average size of buffer inventory 260 units, Maximum level of inventory 1,240 units
B. Average size of buffer inventory 260 units, Maximum level of inventory 740 units
C. Average size of buffer inventory 560 units, Maximum level of inventory 1,240 units
D. Average size of buffer inventory 560 units, Maximum level of inventory 740 units
MaximumAverageMinimum -
Supply lead time20 days12 days6 days
Daily usage25 units20 units10 units
The business wishes to avoid any risk of running out of this inventory item.
What is the size of the buffer inventory (using average figures) and the maximum level of inventory?
A. Average size of buffer inventory 260 units, Maximum level of inventory 1,240 units
B. Average size of buffer inventory 260 units, Maximum level of inventory 740 units
C. Average size of buffer inventory 560 units, Maximum level of inventory 1,240 units
D. Average size of buffer inventory 560 units, Maximum level of inventory 740 units