ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following systems is an example of a reorder point system?
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Computerized inventory system
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Order book system
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Economic order quantity/economic order value system
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Minimum/maximum level system
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Explanation:
Detailed explanation-1: -The reorder level is the level of inventory where the company should start the process to replenish the inventory. Maximum, minimum and average levels of stock are the highest level of inventory a company can hold, the precautionary level of inventory and the average stock.
Detailed explanation-2: -The reorder point (ROP) is the minimum inventory or stock level for a specific product that triggers the reordering of more inventory when reached. When calculating the reorder points for different SKUs, the lead time it will take to replenish inventory is factored in to ensure inventory levels don’t reach zero.
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