Multiple choice

Re-ordering level = Maximum consumption x

  1. Minimum consumption

  2. Maximum re-order period

  3. Minimum re-order period

  4. Both (1) and (2)

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The re-ordering level formula is defined as Maximum Consumption multiplied by Maximum Re-order Period. This ensures that the organization has enough stock to cover the longest possible lead time.

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