BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The board game Skip-Bo has daily sales of 14 units. It takes 18 days to receive a new shipment. Safety stock purchased is 38. What is the reorder point for the game?
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252
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271
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290
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Explanation:
Detailed explanation-1: -The ROP calculation takes into account an item’s average lead time, its demand rate, and its safety stock level if a company utilizes safety stock. The reorder point formula is ROP = (lead time x demand rate) + safety stock level.
Detailed explanation-2: -The reorder quantity formula is simple: just Average Daily Usage x Average Lead Time.
Detailed explanation-3: -To calculate safety stock, work out your average daily use for a product and multiply it by its average lead time – how long it takes, in days, to arrive once you place an order. Then subtract this number from your maximum daily use times your maximum lead time. The result is the safety stock number for that product.
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