The Annual Demand for a Product Has Been Projected at 2,000

The annual demand for a product has been projected at 2,000 units.This demand is assumed to be constant throughout the year.The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost.Currently, the purchase cost is $40 per unit.There are 250 working days per year.Whenever an order is placed, it is known that the entire order will arrive on a truck in 6 days.Currently, the company is ordering 500 units each time an order is placed.What should be the reorder point (excluding any safety stock) under the current policy?

A) 48
B) 100
C) 6
D) 24

Correct Answer:

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