Refer to the figure.If the company operates 200 days a year and the lead time for the item is five days,what is the reorder point if a safety stock of 50 units is maintained?
A)4 days
B)25 units
C)50 units
D)175 units

Question

Quizplus · Accepted Answer

The reorder point formula is (Average daily demand x lead time) + safety stock. Using the information in the figure, the average daily demand is 100 units/day, the lead time is 5 days, and the safety stock is 50 units. Substituting these values into the formula gives: (100 units/day x 5 days) + 50 units = 550 units. Therefore, the reorder point with a safety stock of 50 units is 550 units, which is option D.

Refer to the Figure