An Introduction to Management Science 13th Edition by David Anderson,Dennis Sweeney ,Thomas Williams ,Jeffrey Camm, Kipp Martin

Exercise 15

The reorder point [see equation (10.6)1 is defined as the lead-time demand for an item. In cases ol long lead times, the lead-time demand and thus the reorder point 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 inventory position or the inventory on hand. Consider the economic order quantity model with D = 5000, C o = $32, C h = $2, and 250 working days per year. Identify the reorder point in terms of the inventory position and in terms of the inventory on hand for each of the following lead times:
a. 5 clays
b. 15 days
c. 25 days
d. 45 days