July Manufacturing uses an average of 150 units per day, although usage can run as high as 175 units per day. If July maintains a recommended amount of safety stock and lead time is three days, what is July's reorder point?
A)450 units
B)510 units
C)525 units
D)600 units

Question

Quizplus · Accepted Answer

The formula for reorder point is:

Reorder Point = (Average Daily Usage x Lead Time) + Safety Stock

Given:
- Average daily usage = 150 units
- Maximum daily usage = 175 units
- Lead time = 3 days
- Recommended safety stock is not given, so we assume it to be 75 units (50% of the maximum daily usage)

Reorder Point = (150 units/day x 3 days) + 75 units
Reorder Point = 525 units

Therefore, the reorder point is 525 units. Option C is the correct answer.

July Manufacturing Uses an Average of 150 Units Per Day