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If no variations in demand or lead time exist, the re-order point (ROP) will equal: A....

If no variations in demand or lead time exist, the re-order point (ROP) will equal:

A. the EOQ

B. the LTD

C. safety stock

D. the service level

E. the EOQ plus safety stock

business   Operations-Management   
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Answer #1

Reorder point = dL + zσd√L

where d = average demand

z = number of standard deviations based on service level

σd = standard deviation of demand

L = Lead Time

When there is no variation in demand, σd = 0 => Reorder Point = dL

Safety Stock = zσd√L = 0

EOQ =

EOQ = √(2CoD/Cc)

Where, Co is the cost of placing one order

D - annual demand

Cc - annual per-unit holding cost

Hence, option (b) is correct

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