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Chapter 20 Reorder Point Sterling Corporation has an EOQ of 5,000 units. The company uses...

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Accounting

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Chapter 20 Reorder Point Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using (Reorder point = Rate of usage x Lead time). units 2. Select the graph that displays the appropriate reorder point. a. b. Inventory (units) Inventory (units) EOQ 2,500 EOQ - 5,000 ROP -2,500 ROP 2.500 10 15 20 10 15 20 Days Days C. d. Inntnn.funitel I antan inite 10 15 10 15 20 20 Days Days d. C. Inventory (units) EOQ Inventory (units) ROP 5,000 5,000 2,500 EOQ ROP 2,500 20 10 15 6. 15 20 10 Days Days Correct answer is 3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists? units

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