Questions 3 and 4?

1. For an independent demand item under continuous review, the on-hand inventory is only 20 units and the reorder point R is 100 units. There are no backorders, but there is one open order for 90 units. Which one of the following statements is true? a. The current inventory position is 100 units. b. There is no need to order at the present time. c. An order should be placed now for 20 units. d. An order should be placed now for 10 units. 2. You are the operations manager of a firm that uses a continuous review inventory control system. Suppose the firm operates 52 weeks per year and has the following characteristics for its primary item: Demand =28,000 units /yr Ordering cost =$35/ order Holding cost =$8/ unit /yr Lead time =2 weeks Standard deviation in weekly demand =100 units Cycle service level =92% What is the economic order quantity for this item? a. greater than 500 units b. between 450 and 500 units c. between 400 and 450 units d. less than 400 units 3. Given the information in Question \#2, what is the reorder point for this item? a. less than 800 units b. between 800 and 1000 units c. between 1000 and 1200 units d. greater than 1200 units 4. For the information in Question \# 2, a periodic review system is now required. If the review period is 3 weeks, what is the target inventory level? a. greater than 2100 units b. between 1550 and 2100 units c. between 800 and 1550 units d. less than 800 units