ITPEC IP October 2020 Question 67
ITPEC IP October 2020 — Question 67 of 100
The minimum Week 2 order is 30 components. Production leaves 20 units after each of Weeks 1 and 2 when replenishment maintains the required safety level. Week 3 needs 40 units and safety stock of 40 × 25% = 10, so 50 must be available. With 20 remaining, order 50 − 20 = 30.
Answer (a)
Why not others:
- 40 covers Week 3 consumption but ignores the 20 already in inventory
- 60 and 80 exceed the amount required for consumption plus safety stock
Key rule: Order quantity = next period's demand + required ending safety stock − inventory available before replenishment.
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