Under conditions of certainty,a reorder point is equal to:
A)average daily demand in units times the length of the replenishment cycle
B)safety stock plus an EOQ
C)base stock plus safety stock
D)base stock minus safety stock

Question

Quizplus · Accepted Answer

Under conditions of certainty, the reorder point is the level of inventory at which a new order should be placed to avoid stockout situations. Since the demand is known with certainty, the reorder point can be calculated by multiplying the average daily demand in units by the length of the replenishment cycle (lead time). Therefore, choice A is the correct answer. The reorder point helps in maintaining the inventory level above the safety stock and below the maximum stock level to achieve efficient inventory management.

Under Conditions of Certainty,a Reorder Point Is Equal To