Question

Given D: Annual use of a particular item, in number of items per year Q: Number of items ordered in one purchase order, in units SS: Safety stock, in units L: Lead time, in fraction of a year I: Current inventory on hand, units Reorder point can be expressed as ______ (x below denotes the multiplication sign).

Answer 1

Answer:

D×L + SS

Explanation:

The reorder point (ROP) is the inventories or stock level for a certain product that, when attained, initiates the reordering of more inventories. The lead time it will take to refill inventories is taken in when computing the reorder points for different stock holding units. This ensures inventory levels do not approach zero.

Computing reorder points necessitates a thorough understanding of purchase habits over a specific time period. The more ROP you compute for each product, the better you'll be able to anticipate future demand and guarantee you're using the reorder quantity calculation appropriately.

From the given information in the question:

The reorder point can be determined by using the formula:

Reorder point = Demand (D) at the point of leas time (L) with the addition of safety stock (SS)

Reorder point = D×L + SS