Estimating reorder point in terms of the inventory position

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Reference no: EM13105275

The reorder point 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. 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=5000 Co = $32 Ch=$2 and 250 working days per year. Identify the reorder point in terms of the inventory position and in terms of the inventory on hard for each of the following lead times.
A 5 days
B 15 days
C 25 days
D 45 days

Reference no: EM13105275

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