eal Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}
\text { Cost of placing an order } & \$ 32.00 \
\text { Unit carrying cost per year } & \$ 4.00 \
\text { Annual unit demand } & 5,625 \
\text { Safety stock } & 100 \
\text { Average daily demand } & 25 \
\text { Normal lead time in days } & 10
\end{array}$

-Refer to the figure.What is the reorder point for the inventory item?
A)250 units
B)350 units
C)600 units
D)1,500 units

Question

eal Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}
\text { Cost of placing an order } & \$ 32.00 \
\text { Unit carrying cost per year } & \$ 4.00 \
\text { Annual unit demand } & 5,625 \
\text { Safety stock } & 100 \
\text { Average daily demand } & 25 \
\text { Normal lead time in days } & 10
\end{array}$

-Refer to the figure.What is the reorder point for the inventory item?
A)250 units
B)350 units
C)600 units
D)1,500 units

Quizplus · Accepted Answer

The reorder point formula is: $ \text{Reorder Point} = (\text{Average Daily Demand} \times \text{Lead Time in Days}) + \text{Safety Stock} $. Given the average daily demand is 25 units and the normal lead time is 10 days, the calculation is $25 \times 10 + 100 = 250 + 100 = 350$ units.

Eal Company Has the Following Information Available Concerning One of Its