22) Cortney’s shop predicts it will use 78,000 units of material during 2019. The daily usage...
22) Cortney’s shop predicts it will use 78,000 units of material during 2019. The daily usage is expected to be 300 units with an expected lead time of 10 days; no safety stock. The cost of material per unit is $12. Cortney estimates a cost of $150 to place each other with an annual carrying cost of $10 per unit. Calculate the re-order point.
Homework Answers
Cortney's shop: Calculation of Re-oder point,
Re-oder point = (Average daily usage (units) × Delivery lead time) + Safety stock
Average daily usage is expected to be 300 units.
Expected lead time is 10 days.
No safety stock.
Hence,
Re-oder point = 300 units × 10 days
Re-oder point = 3000 units.
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