The Formula for the Reorder Point Without Safety Stock Is

question 66

Multiple Choice

The formula for the reorder point without safety stock is:

• A) Maximum daily sales ′ Average lead time
• B) Average daily sales - Maximum daily sales ′ Average lead time
• C) Maximum daily sales - Average daily sales ′ Average lead time
• D) Average daily sales ′ Average lead time

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Definitions:

FIFO Method

"First In, First Out," an inventory valuation method where goods first added to inventory are the first ones to be sold.

Weighted-Average Method

A technique used in various contexts, such as inventory valuation and cost accounting, that calculates an average taking into account the proportionate importance of each component.

Equivalent Units

A concept in cost accounting used to allocate production costs between completed and partially completed goods.

FIFO Method

First-In, First-Out method, an inventory valuation technique where goods first added to inventory are assumed to be the first ones sold.