Inventory Cycle Analysis Multiple-Choice: Thoran Electronics Company began producing pacemakers last year. At that time, the company
Question:
Inventory Cycle Analysis— Multiple-Choice: Thoran Electronics Company began producing pacemakers last year. At that time, the company forecasted the need for 10,000 integrated circuits annually. During the first year, the company placed orders when the inventory dropped to 600 units so that it would have enough to produce pacemakers continuously during a three-week lead time. Unfortunately, the company ran out of this component on several occasions, causing costly production delays. Careful study of last year's experience resulted in the following expectations for the coming year:
The study also suggested that usage during a given week was statistically indepen- dent of usage during any other week, and usage was also statistically independent of lead time.
Required:
a. The expected average usage during a regular production week is:
(1) 180 units. (2) 200 units. (3) 280 units. (4) 460 units. (5) Some usage other than those given above.
b. The expected usage during lead time is:
(I) 840 units. (2) 400 units. (3) 360 units. (4) 420 units. (5) Some usage other than those given above.
Transcribed Image Text:
Weekly Usage 280 units 180 units Related Probability of Usage .2 280 1.0 Lead Time 3 weeks 2 weeks Related Probability of Lead Time 1.0
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The study also suggested that usage during a given week was statistically indepen- dent of usage during any other week, and usage was also statistically independent of lead time.
