A retailer uses a 30-unit reorder point,based on assuming a 5-day lead time,a 5-day usage rate,and a 5-unit safety stock.For how many days will a stockout occur if the lead time becomes 8 days and the usage rate continues at 5 units per day?

Question

Quizplus · Accepted Answer

With the given reorder point and safety stock, the retailer has 35 units of inventory (30 + 5) to cover the 5-day demand during the lead time. However, with the lead time increasing to 8 days, the retailer will need to have 40 units (8 days x 5 units per day) of inventory to cover the usage during that time.

Since the reorder point and safety stock have not changed, the retailer will run out of stock after 35 units (reorder point + safety stock) are sold. With a daily usage rate of 5 units, this will occur after 7 days of stock being available (35 units / 5 units per day). Therefore, taking into account the increased lead time of 8 days, there will be a stockout for 2 days (8 days - 6 days of inventory coverage). Hence, the answer is C) 2 days.

A Retailer Uses a 30-Unit Reorder Point,based on Assuming a 5-Day