Question

A partial inventory record for Capital Tires Inc. is shown. When did the inventory fall below the reorder point? (Hint: Find the number on hand for each month first.)

Answer 1

Number on hand
=opening balance+oty in-oty out
January 150+30−100=80
February 80+40−20=100
March 100+10−80=30
April 30+30−25=35
May 35

Answer 2

The inventory fell below the reorder point in May.

Explanation:

To know about the inventory in hand we will subtract the quantity out and add the quantity in with the inventory available.

Opening balance is = 150

In January in is 30 and out is 100 so in hand will be= 150+30−100=80

Similarly in February the current in hand is 80(from January) so next in hand will be = 80+40−20 =100

In March = 100+10−80=30

In April = 30+30−25=35

In May no in and no out but the inventory is 35 that is below record point of 40. So, the answer is May.