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Usagi
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Joined: 13 Nov 2011
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Posts: 28
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| Posted: 03 Dec 2011 at 08:18 | IP Logged
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Please help me to understand?
I can't understand why 50 plus 200. I think 50 is counted twice...
Bisk 51-57
Mystery
company uses the economic order quantity model to determine order size.
Mystery's order quantity for Product XYZ is 150 units. Mystery has a
safety stock of product XYZ. What is Mystery's average inventory level
for XYZ?
a 200
b 150
c 125
d 50
Answer (a)
Typically,
the quantity of safety stock on hand will be 50units prior to receipt
of an order. When an order for 150 units is received, there will then
be 200 units on hand. Without information to the contrary, assume even
use. Average inventory is 125 units.(50 units plus 200 units/2)
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jl0329
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Joined: 15 Feb 2011
Location: United States
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Posts: 186
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| Posted: 05 Dec 2011 at 17:01 | IP Logged
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I just begin studying BEC and have no idea what EOQ is.
But based on the explanation you provided, here are my
thought.
1. You said answer is (a), but then the actual answer is
(c) in the explanation. Which one is the book's answer??
2. 50 is counted twice because it's asking for the
AVERAGE level.
Day 1 - Holding 50 units,
Day 2 - Holding 200 units, what is the average holding
volume for 2 days?
125 units! Common sense right?
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Usagi
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Posts: 28
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| Posted: 13 Dec 2011 at 01:11 | IP Logged
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Dear jl0329
Thank you very much. I got it. It's very basic how to count average but I didn't know. Thank you for your help!
Usagi
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Topic: BEC-EOQ
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