Margaret Company has an economic order quantity for item B of 100 units.The annual demand for the product is 1,400 units, and the unit carrying cost per year is $7.The company operates 200 days a year, the lead time for the item is ten days, and the safety stock is 100 units. What is the reorder point?
A) 70 units
B) 170 units
C) 1000 units
D) 100 units

Question

Quizplus · Accepted Answer

Reorder Point = (Demand per day x Lead time) + Safety Stock
Demand per day = Annual demand / Working days per year = 1,400 / 200 = 7 units per day
Lead time = 10 days
Safety stock = 100 units
Reorder Point = (7 x 10) + 100 = 170 units

Margaret Company Has an Economic Order Quantity for Item B