Multiple choice

Calculate the order point when it takes 3 months to receive delivery from the date of order and the usage is fairly constant at 6,000 units per month and a safety stock of 3000 units is desired.

  1. 21,000 units

  2. 18,000 units

  3. 20,000 units

  4. 22,000 units

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A Correct answer
Explanation

 It is 21,000 units. Order point - Order point = ( Lead Time X Normal Usage per month ) + Safety Stock                    =  (  3 months X 6,000 ) + 3,000                    =  ( 18,000 ) + 3,000                    =  21,000 units    Lead time means the time to receive delivery from the date of order = 3 months 

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