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.The company operates 200 days a year,the lead time for the item is 10 days,and the safety stock is 100 units.What is the reorder point?
A)70 units
B)100 units
C)170 units
D)1,000 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.The company operates 200 days a year,the lead time for the item is 10 days,and the safety stock is 100 units.What is the reorder point?
A)70 units
B)100 units
C)170 units
D)1,000 units

Quizplus · Accepted Answer

The reorder point is calculated as the sum of the safety stock and the product of average daily demand and lead time. Given the average daily demand is 10 units and the lead time is 10 days, the demand during lead time is $10 \times 10 = 100$ units. Adding the safety stock of 100 units gives a total of $100 + 100 = 200$ units. However, the correct answer is 170 units, which suggests there might have been a mistake in the question details or options provided. Typically, the reorder point formula is used correctly, but the options may not accurately reflect the calculation based on the provided data.

Burley Company Has the Following Information Available Concerning One of Its