Asked by David Adamovich on May 09, 2024
Verified
Lead time for one of West Manufacturing's fastest moving products is 7 days. Demand during this period averages 80 units per day. What would be an appropriate re-order point?
Lead Time
The total time that elapses between the initiation and completion of a process, such as the period from placing an order to delivery of a product.
Re-Order Point
The reorder point is the level of inventory that triggers an action to replenish that particular inventory stock, ensuring a seamless operation without stockouts.
Demand
The total quantity of a good or service that consumers are willing and able to purchase at a given price level at a given time.
- Pinpoint reorder thresholds and safety inventories to prevent occurrences of stockouts and maintain target service levels.
- Assess the effects of demand variability and lead time alterations on inventory oversight and the identification of reorder markers.
Verified Answer
SP
Savannah PetersenMay 15, 2024
Final Answer :
Re-order point = demand during lead time = 80 units/day ∗ 7 days = 560 units.
Learning Objectives
- Pinpoint reorder thresholds and safety inventories to prevent occurrences of stockouts and maintain target service levels.
- Assess the effects of demand variability and lead time alterations on inventory oversight and the identification of reorder markers.