If Average Demand for an Inventory Item Is 200 Units

question 78

Multiple Choice

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is

• A)100 units.
• B)200 units.
• C)300 units.
• D)600 units.
• E)700 units.

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Definitions:

Backlog Costs

Expenses associated with delays in filling orders or meeting service obligations, often due to insufficient inventory or production capacity.

Level Strategy

A business approach that maintains steady production rates and workforce levels, even in the face of demand fluctuations, aiming for operational stability.

Production Planner

A professional responsible for scheduling and coordinating manufacturing processes to meet demand and optimize resources.

Aggregate Planning

A process by which a company determines ideal levels of capacity, production, subcontracting, inventory, and labor for medium-term future periods to meet forecasted demand.