Moriah's Candle Company manufactures candles. The company buys wax in 45-Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year.
The lead time is 4 working days and the average rate of usage is 60 containers per day. What is the reorder point?

Question

Quizplus · Accepted Answer

The reorder point is calculated as the product of the lead time and the average rate of usage. Here, it's 4 working days * 60 containers/day = 240 containers.

Moriah's Candle Company Manufactures Candles