The materials manager for a tire manufacturer must periodically place orders for a key chemical,one of the raw materials used in producing tires.The manager knows that manufacturing uses the chemical at a rate of 300 lbs.each week,and the lead time for delivery is 4 days.Assume that the manufacturing operation runs 5 days a week.At what point should the chemical be reordered?

Question

Quizplus · Accepted Answer

The reorder point is calculated based on the daily consumption rate and the lead time for delivery. Since the manufacturing uses 300 lbs. each week and operates 5 days a week, the daily consumption rate is 60 lbs. (300 lbs. / 5 days). With a lead time of 4 days, the reorder point is 240 lbs. (60 lbs./day * 4 days).

The Materials Manager for a Tire Manufacturer Must Periodically Place