What is the reorder point if daily usage is 25 units, lead time is 8 days, and safety stock is 50 units?
Correct Answer
A) 250 units
Reorder point = (Daily usage × Lead time) + Safety stock = (25 × 8) + 50 = 200 + 50 = 250 units. This ensures adequate stock during the lead time plus a safety buffer.
Why This Is the Correct Answer
The reorder point formula correctly combines consumption during lead time with safety stock. Daily usage (25 units) multiplied by lead time (8 days) gives 200 units needed during the ordering period. Adding the 50-unit safety stock buffer provides the total reorder point of 250 units. This ensures inventory won't run out during the lead time while maintaining a protective cushion.
Why the Other Options Are Wrong
Option B: 150 units
150 units is incorrect because it appears to only account for 6 days of usage (25 × 6 = 150) without including safety stock, which would leave the project vulnerable to stockouts.
Option C: 200 units
300 units is incorrect because it appears to add an extra 50 units beyond the correct calculation, possibly double-counting safety stock or miscalculating lead time demand.
Memory Technique
Use the acronym 'DLS' - Daily usage × Lead time + Safety stock. Think 'Don't Lose Stock' to remember all three components must be included.
Reference Hint
Look up inventory management or materials management sections in construction management references, typically found in project management or business operations chapters.
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