A company consumes 50 units daily, has a 10-day replenishment lead time, and maintains 10 units in safety stock. The company should order additional units when inventory reaches:
A company consumes 50 units daily, has a 10-day replenishment lead time, and maintains 10 units in safety stock. The company should order additional units when inventory reaches:
To determine the reorder point, we need to calculate the amount of inventory consumed during the lead time and add the safety stock. The company consumes 50 units per day and has a 10-day lead time, so it will consume 50 units/day * 10 days = 500 units during the lead time. Adding the safety stock of 10 units, the reorder point is 500 + 10 = 510 units. Thus, additional units should be ordered when inventory reaches 510 units.
reorder point is (50 units/day * 10 days) + 10 units = 510 units