Consider the following data supplied by Cotton Tops,a t-shirt distributor:
Calculate the reorder point if Cotton Tops ordered 1000 tops every two weeks and the delivery time was three weeks.

Question

Consider the following data supplied by Cotton Tops,a t-shirt distributor: 
Calculate the reorder point if Cotton Tops ordered 1000 tops every two weeks and the delivery time was three weeks.

Quizplus · Accepted Answer

To calculate the reorder point, we need to consider the following formula:

Reorder point = (Average daily demand * Delivery time) + Safety stock

First, we need to calculate the average daily demand, which is calculated as:

1000 tops ordered every two weeks = 1000/14 tops per day = 71.43 tops per day

Next, we need to calculate the delivery time in days, which is 3 weeks = 21 days.

Now we need to estimate the safety stock. However, since no information is provided about safety stock, we will assume it to be zero.

Therefore, the reorder point can be calculated as:

Reorder point = (71.43 * 21) + 0 = 1500

Hence, the correct answer is 500 units as it would be below the Reorder Point calculated.

Consider the Following Data Supplied by Cotton Tops,a T-Shirt Distributor