Figure 20 - 1
Moriah's Candle Company manufactures candles. The company buys wax in 45Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year.
-Refer to Figure 20-1. The lead time is 4 working days, the average rate of usage is 60 containers per day, and the company carries a safety stock of 25 containers. What is the reorder point?

Question

Figure 20 - 1
Moriah's Candle Company manufactures candles. The company buys wax in 45­Kilogram containers that cost $17 each. The company uses 25,000 containers per year, and usage occurs evenly throughout the year. The average cost to carry a 45-Kilogram container in inventory per year is $3, and the cost to place an order is $9. The company works 250 days per year.
-Refer to Figure 20-1. The lead time is 4 working days, the average rate of usage is 60 containers per day, and the company carries a safety stock of 25 containers. What is the reorder point?

Quizplus · Accepted Answer

Reorder point = (Lead time in days * Average usage per day) + Safety stock
Lead time = 4 days
Average usage per day = 60 containers/day
Safety stock = 25 containers
Reorder point = (4 * 60) + 25 = 265 containers. Therefore, the correct answer is C.