A retailer uses a 20-unit reorder point based on assuming a 3-day lead time,a 5-day usage rate,and a 5-unit safety stock.In how many days will a stockout occur if the lead time becomes 7 days and the usage rate continues at 5 units per day?

Question

Quizplus · Accepted Answer

The current inventory level is (20-3*5)+5=2 units.

If the lead time becomes 7 days, the retailer needs to order earlier to avoid stockouts.

The new reorder point should be (7+5)*5+5= 45 units.

Since the current inventory level is only 2 units, the retailer needs to order 43 units to reach the new reorder point.

The time it takes to run out of inventory is the number of units on hand divided by the daily usage rate: 43/5= 8.6 days.

Rounding up, the answer is 9 days. Therefore, a stockout will occur in 9-3=6 days.

So the answer is D, 4 days.

A Retailer Uses a 20-Unit Reorder Point Based on Assuming