Orangetree Pharma's demand for test tubes is 72,000 units per year. If the lead time for placing an order is five (5) days, at what level of inventory should Orangetree place an order for raw materials? In your computations, assume a 360-day year.

Question

Quizplus · Accepted Answer

The daily demand is 72,000 units / 360 days = 200 units per day. The reorder level is daily demand multiplied by lead time: 200 units/day * 5 days = 1,000 units.

Orangetree Pharma's Demand for Test Tubes Is 72,000 Units Per