A company has recorded the last five days of daily demand on their only product. Those values are 120, 125, 124, 128, and 133. The time from when an order is placed to when it arrives at the company from its vendor is 5 days. Assuming the basic fixed-order quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?
A. 120.
B. 126.
C. 630.
D. 950.
E. 1,200.

Since the basic fixed-order quantity inventory model fits this situation and no safety stock is needed, the reorder point (R) can be calculated as follows:

Reorder point (R) = Average daily sales * average lead time in days = 126 * 5 = 630

Therefore, the correct option is C. 630.

bihariyadeep28 bihariyadeep28 · Answer 2 · 2022-03-30T21:36:51+02:00

Assuming the basic fixed-order quantity inventory model fits this situation and no safety stock is needed, 630 is the reorder point (R) of the company and Option C is correct.

What is reorder point?

Reorder point is the point in any business where the stock or inventory of the business is required to be refilled or replenished. This tells the organization the time and quantity of reorder.

Given:

Time in days = 5 days

Average sales = (120 + 125 + 124 + 128 + 133) / Lead time

Average sales = 630 / 5 = 126

This model is appropriate for the basic fix order method and there is no need of any safety stock as well.

[tex]\begin{aligned} \rm Reorder\ point (R) = Average\ daily\ sales \times average\ lead\ time\ in\ days \\Reorder\ point= 126 * 5 Reorder\ point = 630 \end[/tex]

Therefore, the correct option is C. 630.

Learn more about reorder quantity here:

https://brainly.com/question/14260146