APICS Certified Supply Chain Professional (CSCP) — Question 424

A company consumes 50 units daily, has a 10-day replenishment lead time, and maintains 10 units in safety stock. The company should order additional units when inventory reaches:

Answer options

• A. 50 units.
• B. 150 units
• C. 490 units.
• D. 510 units.

Correct answer: D

Explanation

The reorder point is calculated by adding the daily usage multiplied by the lead time to the safety stock. In this case, 50 units/day * 10 days = 500 units plus 10 units of safety stock equals 510 units. Therefore, when inventory reaches 510 units, the company should reorder.