The general formula for calculating the inventory reorder point is
A) average inventory usage rate multiplied by lead time.
B) economic order quantity less average inventory usage rate.
C) lead time multiplied by economic order quantity.
D) lead time multiplied by average inventory turnover rate.

Question

Quizplus · Accepted Answer

The inventory reorder point is the level of inventory at which a new order should be placed to avoid stockouts. It is calculated by multiplying the average inventory usage rate by the lead time, which represents the time it takes to receive a new order. This formula ensures that the inventory level is high enough to cover demand during the lead time, but not so high that excess inventory is being held.

The General Formula for Calculating the Inventory Reorder Point Is