Scenario 12-1.
Brian's Bicycle Manufacturing Company is having inventory control problems. Furthermore, inventory is critical to the cash flow of the business since each order requires a substantial cash outlay. Brian has been ordering through the use of visual control, but recently key components have run short and stopped the assembly line. Production has been increasing monthly due to increased demand. The demand for the bikes is 12,000 a year with the average ordering cost being $12. The cost of holding the inventory is $.95 per item. Brian comes to you for advice.
-In Scenario 12-1, above, the time from order placement until delivery takes four weeks. This time period is called

Question

Scenario 12-1. 
Brian's Bicycle Manufacturing Company is having inventory control problems. Furthermore, inventory is critical to the cash flow of the business since each order requires a substantial cash outlay. Brian has been ordering through the use of visual control, but recently key components have run short and stopped the assembly line. Production has been increasing monthly due to increased demand. The demand for the bikes is 12,000 a year with the average ordering cost being $12. The cost of holding the inventory is $.95 per item. Brian comes to you for advice.
-In Scenario 12-1, above, the time from order placement until delivery takes four weeks. This time period is called

Quizplus · Accepted Answer

The time from order placement until delivery is called lead time. This information is important to consider when determining the appropriate reorder point and quantity.

Scenario 12-1. Brian's Bicycle Manufacturing Company Is Having Inventory Control Problems. Furthermore