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Re-order levels

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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April 1, 2015 at 12:20 pm #239801
Lusy
Member
- Topics: 4
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Annual demand of raw material units is 240,000. If a year has 360 days in total and order takes 35 days to reach from supplier to the manufacturer then:
What is the optimum re-order level of raw material units?
Is the solution of this problem the following?
Re-order level = 240,000*35=8,400,000
Thanks in advance!
April 1, 2015 at 2:55 pm #239822
John Moffat
Keymaster
- Topics: 57
- Replies: 54487
I think you were trying to do it the right way, but you have made a very silly mistake!!
The reorder level needs to be enough to last 35 days.
However the demand per day is 240,000/360 !!
(Your reorder level is enough to last for 35 years!!!!!)
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