The reorder point is simplest to compute when:
A)both demand and purchase-order lead times are known with certainty
B)the number of units sold varies
C)the safety stock amount never varies
D)the relevant ordering costs and the relevant carrying costs are equal

Question

Quizplus · Accepted Answer

In order to compute the reorder point, it is crucial to have a clear understanding of the demand and purchase-order lead times, which allow for accurate estimation of the time required between ordering and receiving inventory. Therefore, having certainty about both demand and purchase-order lead times is the simplest way to compute the reorder point.

The Reorder Point Is Simplest to Compute When