A nearby restaurant orders by the perpetual order method. Normal usage for one inventory item is 4 cans per day. Delivery takes 5 days. Par stock has been set at 65 cans, and order point at 30 cans. The item is packed 12 to a case. Determine normal reorder quantity.

Question

Quizplus · Accepted Answer

Normal reorder quantity = (Normal usage x Delivery time) + Par stock - Order point= (4 cans per day x 5 days) + 65 cans - 30 cans= 20 cans + 65 cans - 30 cans= 55 cansSince the item is packed 12 to a case, the normal reorder quantity is 55 cans / 12 cans per case = 4.58 cases. Rounding up to the nearest whole case, the normal reorder quantity is 5 cases.

A Nearby Restaurant Orders by the Perpetual Order Method