For inventory systems with constant demand and a fixed lead time, A)the reorder point = lead-time demand. B)the reorder point lead-time demand. C)the reorder point

Question

For inventory systems with constant demand and a fixed lead time,
A)the reorder point = lead-time demand.
B)the reorder point > lead-time demand.
C)the reorder point < lead-time demand.
D)the reorder point is unrelated to lead-time demand.

Quizplus · Accepted Answer

The reorder point for inventory systems with constant demand and a fixed lead time is equal to the lead-time demand. This is because lead time demand is the amount of inventory that will be used during the lead time, and the reorder point is the inventory level at which a new order needs to be placed to ensure that the inventory level does not go below a certain threshold. Therefore, the reorder point needs to be equal to the amount of inventory that will be used during the lead time to ensure that there is enough inventory to cover demand during the lead time.

For Inventory Systems with Constant Demand and a Fixed Lead