Consider the following conditions for an item used in the Hess Company's manufacturing process:
Which of the following statements best describes Hess's situation regarding inventory replenishment?
A) No action is required, since a scheduled receipt is due to be delivered to Hess.
B) To cover its backorders, Hess should order two lots of 50 units.
C) Because it is incurring backorders, Hess should increase its reorder point.
D) Hess should place an order for 50 units, since the inventory position is less than the reorder point.

Question

Consider the following conditions for an item used in the Hess Company's manufacturing process: 
Which of the following statements best describes Hess's situation regarding inventory replenishment?
A) No action is required, since a scheduled receipt is due to be delivered to Hess. 
B) To cover its backorders, Hess should order two lots of 50 units. 
C) Because it is incurring backorders, Hess should increase its reorder point. 
D) Hess should place an order for 50 units, since the inventory position is less than the reorder point.

Quizplus · Accepted Answer

The conditions code provided in the question indicates that the inventory position is below the reorder point, which means that it is time to place an order for the item. The best option is to order 50 units, which is the minimum order quantity required. No other information is provided to suggest that Hess should increase its reorder point or order more than 50 units to cover backorders. Additionally, there is no indication that a scheduled receipt is due to be delivered, so option A is not applicable. Option B suggests ordering two lots of 50 units, but there is no indication that this would be necessary or efficient.

Consider the Following Conditions for an Item Used in the Hess