CAF-5 · Chapter 16 · Question 6 of 10
If a company's average weekly demand for a component is 90 units, the expected lead time is 2 weeks, and management has decided to maintain a safety stock of 50 units, what is the appropriate Re-order Level?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) 230 units
Explanation
When a safety stock is maintained, the Re-order Level is calculated as: (Average Demand × Average Lead Time) + Safety Stock. Calculation: (90 units × 2 weeks) + 50 units = 180 + 50 = 230 units.
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