OM5 C12Test Bank48. Cynthia Baker, manager of a large medical supply house that operates 50 weeks per year and 5 days per week, has decided to implement a fixed-period inventory system for all class A items. One such item has the following characteristics: Demand = 10,000 units/year Order cost = $50/order Holding cost = $5/unit/year If Cynthia wishes to minimize the total cost (thereby approximating the economic order quan-tity (EOQ)), what should be the value of T, the number of workdays between orders (i.e., re-view period)?
49. Two fundamental inventory decisions are: when to order and how much to order. Which of the following statement is TRUE about fixed-quantity (FQS) and fixed-period (FPS) inventory systems?
50. Which is NOT a feature of the periodic review system?
51. Which of the following statements is NOT TRUE regarding the fixed-period system (FPS)?a.The time between orders is constant, but the order quantity might vary.b.An order is time-triggered, not inventory-triggered.c.The optimal replenishment level includes the demand during the review period, plus any desired safety stock.d.When demand is not certain, the FPS addresses stockouts by adding safety stock to the ex-pected demand during time T + L.ANS: C