Chelsea Company has determined the following costs are associated with one of its products.$\begin{array}{ll}
\text { Lead time (weeks) } & 11 \
\text { Average weekly usage (units) } & 100 \
\text { Maximum weekly us age (units) } & 120
\end{array}$
-
The reorder point is

A)1125 units.
B)1600 units.
C)1320 units.
D)322 units.

Question

Chelsea Company has determined the following costs are associated with one of its products.$\begin{array}{ll}
\text { Lead time (weeks) } & 11 \
\text { Average weekly usage (units) } & 100 \
\text { Maximum weekly us age (units) } & 120
\end{array}$
-
The reorder point is

A)1125 units.
B)1600 units.
C)1320 units.
D)322 units.

Quizplus · Accepted Answer

The reorder point formula is: Reorder Point = Lead Time * Average Weekly Usage. However, to account for variability and ensure safety stock, the maximum usage rate is often considered. Thus, the correct calculation for the reorder point in this scenario, considering the potential for maximum usage, is: Reorder Point = Lead Time (weeks) * Maximum Weekly Usage (units) = 11 weeks * 120 units/week = 1320 units.

Chelsea Company Has Determined the Following Costs Are Associated with One