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:

Gross Profit

A company's revenue minus its cost of goods sold, indicating the efficiency of a company in managing its production and labor costs.

Net Income

A company's total earnings or profit, calculated by subtracting total expenses from total revenues.

Income Before Income Taxes

This is the earnings of a company before accounting for income taxes, representing the amount made from ordinary operations.

Net Income

The total profit of a company after all expenses, taxes, and losses have been subtracted from total revenue.