When demand and delivery lead time are known and constant, daily demand = 8, purchase lead time = 5 days, and the purchase price = $20/unit, then the reorder point is:
A) 2
B) 13
C) 32.
D) 40.
E) 56.

Question

Quizplus · Accepted Answer

Reorder Point = Average Daily Demand x Delivery Lead Time + Safety Stock
Given, daily demand = 8 units/day
Purchase lead time = 5 days 
So, Delivery Lead Time = purchase lead time + possible delay = 5 + 0 = 5 days
Safety stock = 0 (not given)

Reorder Point = 8 x 5 = 40 units.

Therefore, the reorder point is 40 units.

When Demand and Delivery Lead Time Are Known and Constant