Walrus Company has the following information available concerning one of its inventory items: $$\begin{array} { l r }
\text { Cost of placing an or der } & \$ 30.00 \
\text { Unit carrying cost per year } & \$ 3.00 \
\text { Annual unit demand } & 6,625 \
\text { Safety stock } & 125 \
\text { Average daily demand } & 25 \
\text { Normal lead time in days } & 10
\end{array}$$ The reorder point for the inventory item is
A)275 units.
B)375 units.
C)625 units.
D)1,525 units.

Question

Walrus Company has the following information available concerning one of its inventory items: $$\begin{array} { l r } 
\text { Cost of placing an or der } & \$ 30.00 \
\text { Unit carrying cost per year } & \$ 3.00 \
\text { Annual unit demand } & 6,625 \
\text { Safety stock } & 125 \
\text { Average daily demand } & 25 \
\text { Normal lead time in days } & 10
\end{array}$$ The reorder point for the inventory item is
A)275 units.
B)375 units.
C)625 units.
D)1,525 units.

Quizplus · Accepted Answer

The reorder point is calculated as (Average daily demand x Normal lead time) + Safety stock = (25 x 10) + 125 = 375 units.

Walrus Company Has the Following Information Available Concerning One of Its