On-hand inventory of an item is only 10 units,and the reorder point R is 135.There are no backorders,and an open order of 110 units is scheduled to arrive next week.Which one of the following statements is TRUE?
A) There is no need to order at the present time.
B) A new order should be issued now.
C) The current inventory position for this item is 125 units.
D) The current inventory position for this item is 110 units.

Question

Quizplus · Accepted Answer

The inventory position is calculated as on-hand inventory plus open orders minus backorders. Here, it is 10 (on-hand) + 110 (open order) - 0 (backorders) = 120 units. Since the reorder point is 135, a new order should be issued now.

On-Hand Inventory of an Item Is Only 10 Units,and the Reorder