A company has recorded the last six days of daily demand on a single product it sells. Those values are 37, 115, 93, 112, 73, and 110. The time from when an order is placed to when it arrives at the company from its vendor is 3 days. Assuming the basic fixed-order-quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?
A) 540
B) 270
C) 115
D) 90
E) 60

Question

Quizplus · Accepted Answer

To find the reorder point (R), we need to calculate the average daily demand and multiply it by the lead time (in this case, 3 days).

Average daily demand = (37+115+93+112+73+110)/6 = 91.67

Reorder point (R) = Average daily demand x lead time = 91.67 x 3 = 275

However, since no safety stock is needed, we can use the exact reorder point value as the answer, which is closest to option B, 270.

A Company Has Recorded the Last Six Days of Daily