Question

The reorder point r = dm is defined as the lead-time demand for an item. In cases of long lead times, the lead-time demand and thus the reorder point may exceed the economic order quantity Q*. In such cases, the inventory position will not equal the inventory on hand when an order is placed, and the reorder point may be expressed in terms of either the inventory position or the inventory on hand. Consider the economic order quantity model with D=4000, C_o =$31, C_h =$4, and 250 working days per year. Identify the reorder point in terms of the inventory position and in terms of the inventory on hand for each of the following lead times. When required, round your answers to the nearest whole number.

a.	6 days
b.	14 days
c.	25 days
d.	45 days

	Lead Time	Inventory position reorder point	On hand reorder point
a.	6 days
b.	14 days
c.	25 days
d.	45 days

Answer 1