Bill’s hardware has an average daily consumption of inventory of 1000 units. It takes Bill 15 days to receive the delivery of inventory after placing the order on the telephone. What is the reorder point for inventory for Bill? Show your calculation and answer below.

15000 units

Explanation:

The reorder point= Average daily consumption x lead time

=1000units x 15 days

=15000 units

Reorder point is stock in hand which triggers to replenish the stock in the firm. If reorder point is calculated efficiently when the last of stock is just consumed the new inventory should have arrived. Lead time is the time taken to replenish the inventory by the supplier. the reorder point is based on the average daily usage in reality the supply and demand may vary on day to day basis.

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