Answer the following questions using the information below:
The following information applies to Dental Labs Plus,which supplies dental burs (used in dental drills)to dentists throughout Victoria.Dental Labs Plus purchases the dental burs from a manufacturer which has a reputation for very high quality in its manufacturing operation.
$$\begin{array} { l l }
\text { Antual demand (weekly demand = 1/52 of annual demand) } & 31200 \text { units } \
\text { Orders per year } & 25 \
\text { Lead time in days } & 20 \text { days } \
\text { Cost of placing an order } & \$ 100
\end{array}$$
-What is the reorder point?
A)1560 units
B)1714 units
C)780 units
D)1680 units

Question

Answer the following questions using the information below:
The following information applies to Dental Labs Plus,which supplies dental burs (used in dental drills)to dentists throughout Victoria.Dental Labs Plus purchases the dental burs from a manufacturer which has a reputation for very high quality in its manufacturing operation.
 $$\begin{array} { l l } 
\text { Antual demand (weekly demand = 1/52 of annual demand) } & 31200 \text { units } \
\text { Orders per year } & 25 \
\text { Lead time in days } & 20 \text { days } \
\text { Cost of placing an order } & \$ 100
\end{array}$$
-What is the reorder point?
A)1560 units
B)1714 units
C)780 units
D)1680 units

Quizplus · Accepted Answer

The reorder point can be calculated as follows:
Reorder Point = (Average Daily Usage × Lead Time in Days) + Safety Stock
Average Daily Usage = (Annual Usage ÷ 250 Working Days) = 39.6
Lead Time in Days = 7
Safety Stock = (Maximum Daily Usage - Average Daily Usage) × Maximum Lead Time in Days
Maximum Daily Usage = 60
Maximum Lead Time in Days = 14

Therefore, the reorder point = (39.6 × 7) + ((60 - 39.6) × 14) = 1714

Hence, the best choice is B.

Answer the Following Questions Using the Information Below: the Following

Answer the Following Questions Using the Information Below:
the Following