The reorder point in the EOQ model is
A)the day of the month for reordering.
B)when all of the inventory has been used.
C)when the inventory level is below the order quantity.
D)the inventory level at which an order for additional units is placed.

Question

Quizplus · Accepted Answer

The reorder point in the EOQ model is the inventory level at which an order for additional units is placed to avoid stock-out situations. It is calculated as the product of the lead time demand and the lead time plus safety stock. Option A is incorrect as it refers to a fixed time period for reordering, which may not consider changes in demand or inventory levels. Option B is incorrect as it assumes that all inventory will be used up before replenishment, which is not practical or efficient. Option C is incorrect as it does not consider the lead time required to receive the new inventory order.

The Reorder Point in the EOQ Model Is