1. XYZ company is competing in a highly competitive market, and company management is of the view that the short cost for any of its products is two times the contribution margin. Product LMN sold by the company has a lead-time of 2 weeks, an annual demand of 15,000 units and standard deviation of annual demand of 200 units. The unit-selling price is $16.00 and the contribution margin is 40%. The inventory holding cost percentage is 25%. The Optimal service level is closest to:
a. 96.3%
b. 97.3%
c. 98.3%
d. 99.3%
2. In the Month of March, Baldwin received orders of 188 units at a price of $15.00 for their product Bid, and in April receives an order for 47 units of their product Bid at $15.00. Baldwin uses the accrual method of accounting and offers 30 day credit terms. Baldwin delivers 0 units in March, 188 units in April and 47 units in May. They received payment for 188 units in April, and payment for 47 units in May. How much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands)
0, $2,820
$2,820 , $705
$3,525 , 0
$1,175 , $1,175