Answer:Reorder point = 700 units
Explanation:
Reorder point (ROP) is the minimum quantity OF inventory that a business should have available in its stock before the inventory is replenished or reordered .
Given
average demand for an inventory item =200 units per day
lead time = three days,
safety stock = 100 units
We have that
Reorder point = (Average daily unit sales x Lead time ) + Safety stock
=( 200 x 3 )+ 100
600 + 100
= 700 units
The minimum quantity of inventory of a stock that a firm should have available before the inventory is replenished. The reorder point is 700 units.
Reorder point (ROP) :
It is the minimum quantity of inventory of a stock that a firm should have available before the inventory is replenished.
Reorder point = (Average daily unit sales x Lead time ) + Safety stock
Given Here,
Average demand for an inventory item = 200 units/day
Lead time = 3 days,
Safety stock = 100 units
Thus,
Reorder Point = ( 200 x 3 )+ 100
Reorder Point = 600 + 100
Reorder Point = 700 units
Therefore, the reorder point is 700 units.
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