Brock Manufacturing uses an average of 2,000 units per day, although usage can run as high as 2,500 units per day. If Brock maintains a recommended amount of safety stock and lead time is four days, what is Brock's reorder point?
A)12,000 units
B)10,000 units
C)8,000 units
D)2,000 units

Question

Quizplus · Accepted Answer

Reorder point = Average daily usage x Lead time + Safety stock

Average daily usage = 2,000 units
Safety stock = (maximum daily usage - average daily usage) x lead time
= (2,500 - 2,000) x 4
= 2,000 units

Reorder point = 2,000 x 4 + 2,000
= 10,000 units

Brock Manufacturing Uses an Average of 2,000 Units Per Day