Burley Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}
\text { Cost of placing an order}&\$ 50.00\
\text {Unit carrying cost per year }& \$ 2.00 \
\text { Annual unit demand}&3,200\
\text {Safety stock }&80\
\text {Average daily demand }&10\
\text {Normal lead time in days }&12\
\end{array}$

-Refer to the figure.What is the reorder point for the inventory item?
A)200 units
B)320 units
C)500 units
D)970 units

Question

Burley Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}
\text { Cost of placing an order}&\$ 50.00\
\text {Unit carrying cost per year }& \$ 2.00 \
\text { Annual unit demand}&3,200\
\text {Safety stock }&80\
\text {Average daily demand }&10\
\text {Normal lead time in days }&12\
\end{array}$

-Refer to the figure.What is the reorder point for the inventory item?
A)200 units
B)320 units
C)500 units
D)970 units

Quizplus · Accepted Answer

The reorder point is calculated as the sum of the product of average daily demand and normal lead time in days, plus the safety stock. Here, it's (10 units/day * 12 days) + 80 units = 120 units + 80 units = 200 units.

Burley Company Has the Following Information Available Concerning One of Its