Lead time for a high-demand product is 21 days. Demand during this period averages 100 units per day.
a.) What is the reorder point?
b.) How does your answer change if demand during lead time doubles to 22 units per day?
c.) How does your demand change if the demand during lead time drops to 50 units per day?
Answers
Answered by
0
Answer:
a. The reorder point (ROP) is the level of inventory which triggers an action to replenish that particular inventory stock. It is a minimum amount of an item which a firm holds in stock, such that, when stock falls to this amount, the item must be reordered. It is normally calculated as the forecast usage during the replenishment lead time plus safety stock. In the EOQ (Economic Order Quantity) model, it was assumed that there is no time lag between ordering and procuring of materials.
Similar questions