Question

Mr. Stan Busfield, distribution center manager for Hogan Kitchenwares, must determine when to resupply his stock of spatulas. The DC experiences a daily demand of 400 spatulas. The average length of the performance cycle for spatulas is 14 days. Mr. Busfield requires that 500 spatulas be retained as safety stock to deal with demand uncertainty.
What is the reorder point for spatulas? Show work please.

Answer 1

Answer:

6,100 spatulas

Explanation:

The reorder point for spatulas is determined by the daily demand multiplied by the lead time, in days, and then added to the required safety stock.

With a daily demand of 400 spatulas, a lead time of 14 days and a safety stock of 500 spatulas, the reorder point is:

$R=(D*T) +S\\R=(400*14)+500\\R=6,100\ spatulas$

The reorder point is 6,100 spatulas.