### Defined as the lead-time demand for an item

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##### Reference no: EM131369907

The reorder point is defined as the lead-time demand for an item. In cases of long lead times, the lead-time demand and thus the reorder poitn may exceed the economic order quantity Q*. In such cases, the inventory position will not equal the inventory on hand when an order is placed, and the reorder point may be expressed in terms of either the invenotry position or the inventory on hand. Consider the economics order quantity model with D = 4500, Co = 30, Ch = 2, and 250 working days per year. Identify the reorder point in terms of the inventory position (IP) and in terms of the inventory on hand (IOH) for a lead time of 5 days.

a IP = 367; IOH = 90

b IP = 90; IOH = 90

c IP = 367; IP = 277

d IP = 277; IP = 367

##### Reference no: EM131369907

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