Question

Assuming no safety stock, what is the reorder point (r) given an average daily demand of 50 units, a lead time of 10 days and 625 units on hand?

Answer 1

Assuming no safety stock, the recorder point will be 500(50*10).

Safety stock is the additional quantity of a product that's saved within the warehouse to prevent an out-of-stock scenario. It serves as insurance against fluctuations in demand.

To in addition understand Z-score, believe that no safety stock is carried. In this situation, the Z-score is 0. then again, there can be sufficient inventory to satisfy demand in 50 percent of cycles.

A reorder point (ROP) is a specific stage at which your stock desires to be replenished. In other phrases, it tells you whilst to vicinity an order so that you won't run out of stock. The reorder factor system is lead time demand + safety stock. Of course, you need to determine what your lead time demand and safety stock numbers are to determine a correct calculation.

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