Calculate the reorder level 1. Calculate the maximum level of inventory 2. Calculate the minimum (buffer) inventory level

Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
Question

Jack Ltd is a market leader in the manufacture of apple juice. They operate a reorder level system of inventory management, and the following information is available for green apples:

Average usage                                      800 per day
Minimum usage                                     540 per day
Maximum usage                                    1260 per day
Lead time for replenishment                  16 - 20 per day
 Reorder quantity                                    19,500 apples

 

a. Calculate the reorder level

1. Calculate the maximum level of inventory

2. Calculate the minimum (buffer) inventory level

 

 

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