The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. At what point should resin be reordered?
A) 0 kilograms remaining
B) 50 kilograms remaining
C) 200 kilograms remaining
D) 400 kilograms remaining
E) 500 kilograms remaining

Question

Quizplus · Accepted Answer

The reorder point is calculated as the daily usage rate multiplied by the lead time. Here, the daily usage is 50 kilograms, and the lead time is 4 days, so the reorder point is 50 kg/day * 4 days = 200 kilograms.

The Materials Manager for a Billiard Ball Maker Must Periodically