Figure 20 - 1
Moriah's Candle Company manufactures candles. The company buys wax in 45Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year.
-Refer to Figure 20-1. The lead time is 4 working days and the average rate of usage is 60 containers per day. What is the reorder point?

Question

Figure 20 - 1
Moriah's Candle Company manufactures candles. The company buys wax in 45­Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year.
-Refer to Figure 20-1. The lead time is 4 working days and the average rate of usage is 60 containers per day. What is the reorder point?

Quizplus · Accepted Answer

The reorder point is calculated by multiplying the lead time by the average rate of usage: 4 days * 60 containers/day = 240 containers.