What is the reorder point for materials if daily usage is 25 units, lead time is 8 days, and safety stock is 50 units?
Correct Answer
B) 250 units
Reorder point = (Daily usage × Lead time) + Safety stock = (25 × 8) + 50 = 200 + 50 = 250 units.
Why This Is the Correct Answer
The reorder point formula correctly accounts for both the expected usage during lead time and the safety buffer needed for unexpected delays or increased demand. By multiplying daily usage (25 units) by lead time (8 days), we get the expected consumption of 200 units during the ordering period. Adding the safety stock of 50 units gives us the total reorder point of 250 units. This ensures materials are ordered before running out, maintaining continuous project operations.
Why the Other Options Are Wrong
Option A: 300 units
This answer appears to add an extra 50 units beyond the correct calculation, possibly double-counting safety stock or adding an unnecessary buffer that increases carrying costs.
Option C: 200 units
This answer only includes the usage during lead time (25 × 8 = 200) but fails to add the required safety stock of 50 units, leaving the project vulnerable to stockouts.
Memory Technique
Remember 'RUL + S' - Reorder point equals (Rate × Usage time × Lead time) + Safety stock. Think 'RULES' for proper inventory management.
Reference Hint
Look up inventory management and material procurement in the project management or construction administration sections of your reference materials.
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