Walrus Company has the following information available concerning one of its inventory items: $$\begin{array} { l r }
\text { Cost of placing an or der } & \$ 30.00 \
\text { Unit carrying cost per year } & \$ 3.00 \
\text { Annual unit demand } & 6,625 \
\text { Safety stock } & 125 \
\text { Average daily demand } & 25 \
\text { Normal lead time in days } & 10
\end{array}$$ If there is a delay in shipping the item, approximately how many days can be covered by the safety stock?
A)5 days
B)31 days
C)26 days
D)110 days

Question

Walrus Company has the following information available concerning one of its inventory items: $$\begin{array} { l r } 
\text { Cost of placing an or der } & \$ 30.00 \
\text { Unit carrying cost per year } & \$ 3.00 \
\text { Annual unit demand } & 6,625 \
\text { Safety stock } & 125 \
\text { Average daily demand } & 25 \
\text { Normal lead time in days } & 10
\end{array}$$ If there is a delay in shipping the item, approximately how many days can be covered by the safety stock?
A)5 days
B)31 days
C)26 days
D)110 days

Quizplus · Accepted Answer

The safety stock is designed to cover the demand during the lead time in case of delays. Given the average daily demand is 25 units, and the safety stock is 125 units, the safety stock can cover 125 units / 25 units/day = 5 days of demand.

Walrus Company Has the Following Information Available Concerning One of Its