Question

ice Manager uses a Periodic Review Inventory System: they check the inventory in the Office Supply Closet once every 10 days, placing an order with their supplier depending on the inventory level in the closet. Once the order is placed, it takes 3 days to receive the order. The average demand for file folders is 70 per day. This week, the operator has counted 240 file folders in the closet. What is the Minimum Restocking Level (restocking policy) needed to cover expected demand over time without stocking out?

Answer 1

910 days

Step-by-step explanation:

Calculation to determine the Minimum Restocking Level needed to cover expected demand over time without stocking out

Using this formula

Minimum Restocking Level= (Average daily demand × Reorder period)+ (Average daily demand × Lead time)

Let plug in the formula

Minimum Restocking Level= (70 days × 10 days) + (70 days × 3 days)

Minimum Restocking Level=700 days + 210 days

Minimum Restocking Level= 910 days

Therefore the Minimum Restocking Level needed to cover expected demand over time without stocking out is 910 days