Chelsea Company has determined the following costs are associated with one of its products.$\begin{array}{ll}
\text { Lead time (weeks) } & 12 \
\text { Average weekly usage (units) } & 120 \
\text { Maximum weekly us age (units) } & 140
\end{array}$
-
The reorder point is

A)1125 units.
B)1600 units.
C)1680 units.
D)322 units.

Question

Chelsea Company has determined the following costs are associated with one of its products.$\begin{array}{ll}
\text { Lead time (weeks) } & 12 \
\text { Average weekly usage (units) } & 120 \
\text { Maximum weekly us age (units) } & 140
\end{array}$
-
The reorder point is

A)1125 units.
B)1600 units.
C)1680 units.
D)322 units.

Quizplus · Accepted Answer

The reorder point is calculated as: (Lead time in weeks) x (Average weekly usage) = 12 weeks x 120 units/week = 1440 units. However, considering maximum usage for safety stock: (Lead time) x (Maximum weekly usage) = 12 weeks x 140 units/week = 1680 units. Therefore, the reorder point is 1680 units.

Chelsea Company Has Determined the Following Costs Are Associated with One