APICS Certified in Logistics, Transportation and Distribution (CLTD) — Question 84

Given the data below, what would be the new reorder point (ROP) if the lead time were reduced by 20%?

Daily demand = 20 units -

Reorder lead time = 10 days -
Safety stock = 15 units

Answer options

• A. 160 units
• B. 175 units
• C. 195 units
• D. 215 units

Correct answer: B

Explanation

To calculate the new ROP, first determine the new lead time by reducing the original lead time of 10 days by 20%, resulting in an effective lead time of 8 days. Then, calculate the ROP using the formula: ROP = (Daily demand * Lead time) + Safety stock, which gives (20 units * 8 days) + 15 units = 175 units. The other options do not reflect this calculation.