Problem 10-03 (Algorithmic)
The reorder point r = dm is defined as thelead-time demand for an item. In cases of long lead times, thelead-time demand and thus the reorder point may exceed the economicorder quantity Q*. In such cases, the inventory positionwill not equal the inventory on hand when an order is placed, andthe reorder point may be expressed in terms of either the inventoryposition or the inventory on hand. Consider the economic orderquantity model with D = 5,000, Co =$31, Ch = $3, and 250 working days peryear.
Identify the reorder point in terms of the inventory positionand in terms of the inventory on hand for each of the followinglead times:
When required, round your answers to the nearest wholenumber.
| a. | 5 days |
| b. | 15 days |
| c. | 27 days |
| d. | 46 days |
|
Lead Time | Inventory position
reorder point | On hand
reorder point |
| a. | 5 days | | |
| b. | 15 days | | |
| c. | 27 days | | |
| d. | 46 days | | |
