Lipscomb is set to establish a reorder policy for his remote snack bar located on Vacation Island. He sells 10 cases of soda per day and has a lead-time for delivery of one week. Occasionally, bad weather or mechanical difficulty can delay his delivery by up to three days. At what point should Lipscomb reorder (how many cases on hand) if he wants to also compensate for unexpected order delays?
A) 30 cases
B) 70 cases
C) 100 cases
D) There is not enough information to answer this question

Question

Quizplus · Accepted Answer

Lipscomb sells 10 cases per day, and the lead time is 7 days, so he needs 70 cases for the lead time. To compensate for a possible 3-day delay, he needs an additional 30 cases (10 cases/day * 3 days). Therefore, he should reorder when he has 100 cases on hand.

Lipscomb Is Set to Establish a Reorder Policy for His