If no variations in demand or lead time exist, the ROP will equal:
A) the EOQ.
B) expected usage during lead timE.
C) safety stock.
D) the service level.
E) the EOQ plus safety stock.

Question

Quizplus · Accepted Answer

The Reorder Point (ROP) is the level of inventory at which a new order should be placed. If there are no variations in demand or lead time, then the ROP will simply equal the expected usage during lead time, which is the quantity of inventory that is expected to be used over the lead time (the time it takes to receive a new order). The Economic Order Quantity (EOQ) and safety stock are both used to account for variations in demand and lead time, neither of which exist in this scenario. The service level is a measure of a company's ability to meet customer demand and is not directly related to the ROP in this context.

If No Variations in Demand or Lead Time Exist, the ROP