Ann Chovies,owner of the Perfect Pasta Pizza Parlour,uses 20 pounds of pepperoni each day in preparing pizzas.Order costs for pepperoni are $10.00 per order,and holding costs are 4 cents per pound per day.Lead time for each order is 3 days,and the pepperoni itself costs $3.00 per pound. Without allowing for safety stock,what reorder point should be used to reorder pepperoni?

Question

Quizplus · Accepted Answer

The reorder point should be calculated based on the daily usage and lead time. Since Ann uses 20 pounds of pepperoni each day and the lead time is 3 days, the reorder point is 20 pounds/day * 3 days = 60 pounds. This means Ann should reorder when there are 60 pounds of pepperoni remaining.

Ann Chovies,owner of the Perfect Pasta Pizza Parlour,uses 20 Pounds