ohling Company makes a variety of household appliances, including automatic can

Question

ohling Company makes a variety of household appliances, including automatic can openers. Small motors used in making can openers are purchased from an outside supplier. Each year, 24,000 small motors are used, at the rate of 96 small motors per day. However, some days as many as 120 small motors are used. It takes Pohling 10 days from the time of order to the time of arrival of the order.

Required:

1. Calculate the reorder point without safety stock.
units

2. Calculate the amount of safety stock.
units

3. Calculate the reorder point with safety stock.
units

Explanation / Answer

Reorder level is the level of materail at which order need to place.

safety level is the level of material hold by the company ix excess of its requirement to meet lead time.

Reorder Point (without safety stock) = average daily usage x lead time

= (96+120)/2 x 10

= 112 x10

= 1,120

Safety Stock = (Maximum Usage - Avaerage Usage ) x Lead time

=(120-96) x 10

=240

Reorder point with safety stock = Safety Stock + average daily usage x lead time

= 240+(96+120)/2 x 10

= 240+112 x10

= 1,360

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.