Answer:
1. 5600 units
2a. 2400
2b. 1680
Step-by-step explanation:
Reordering point formula is :
(Average daily sales * Delivery lead time) + Safety Stock
Problem 1
Calculating safety stock
Safety stock = Average daily sales * Delivery lead time
Safety stock = 700 * 4 days
Safety stock = 2800 units
Calculating Reordering point
(700 units * 4 days) + 2800 units
5600 units
Problem 2
Material A
Calculating safety stock
Safety stock = Average daily sales * Delivery lead time
Delivery time required is 3 to 5 weeks taking average which is 4 weeks is a month which gives 30 days
Safety stock = 40 units * 30 days
Safety stock = 1200 units
Calculating Reordering point
(40 units * 30 days) + 1200 units
2400 units
Material B
Calculating safety stock
Safety stock = Average daily sales * Delivery lead time
Delivery time required is 2 to 4 weeks taking average which is 3 weeks and multiplying with 7 days per week gives 21 days
Safety stock = 40 units * 21 days
Safety stock = 840 units
Calculating Reordering point
(40 units * 21 days) + 840 units
1680 units