Annual demand for product G is 117,000 units and the lead-time for orders is three weeks. Demand is steady throughout the year. Assuming that no buffer stock is held, at what level of inventory should the company re-order product G?

Question

Quizplus · Accepted Answer

To calculate the reorder point without buffer stock, you need to determine the weekly demand and then multiply it by the lead time in weeks. Annual demand is 117,000 units, so weekly demand is 117,000 units / 52 weeks = 2,250 units. For a lead time of 3 weeks, the reorder level is 2,250 units/week * 3 weeks = 6,750 units.

Annual Demand for Product G Is 117,000 Units and the Lead-Time