Question

Annual demand for the notebook binders at​ Duncan's Stationery Shop is 10 comma 200 units. Dana Duncan operates her business 300 days per year and finds that deliveries from her supplier generally take 5 working days. Calculate the reorder point for the notebook binders that she stocks. The reorder point for the notebook binders is nothing units

Answer 1

170

Step-by-step explanation:

Assuming no safety stock is used, the reorder point (ROP) can be given by:

ROP = lead time x average daily demand.

The lead time is 5 days.

Average daily demand (ADD) is given by:

`ADD = (10,200)/(300) \\ADD = 34`

Therefore, the reorder point is:

`ROP = 34*5\\ROP = 170`

This means that Duncan's Stationery Shop should not let inventory fall under 170 binders in order to meet their average daily demand.