When Demand and Delivery Lead Time Are Known and Constant

question 34

Multiple Choice

When demand and delivery lead time are known and constant, the reorder point is the ____.

• A) demand during the delivery lead time
• B) safety stock
• C) demand during lead time + safety stock
• D) economic order quantity
• E) average inventory

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Definitions:

Time Basis

A method of compensation or work arrangement based on the amount of time spent on a job rather than the task's outcome.

Expenses Recorded

The process of documenting all costs incurred during a specific period in the financial records, which are used to assess the company's profitability.

Current Ratio

A financial ratio that measures the number of times the firm can cover its current liabilities with its current assets.

Current Liabilities

A company's obligations or debts that are due within a year or within its operating cycle.