The re-order point (ROP) for the new batch of the bars of soaps be placed when there is 4800 bars left in the inventory.
Define the term reorder point (ROP)?
- An exact level where the your stock has to be restocked is characterized as a reorder point (ROP). To put it another way, it advises you when to order so that you won't run out of supply.
- You'll need to be aware of the following factors in order to figure out the ROP for every item:
- Lead period: Days needed (in days) for the vendor to complete your order
- Safeguard stock: The quantity of excess stock, if any, you maintain on hand to assist prevent stockouts
- Daily usage: Average number of sales that particular item typically sees per day.
ROP = (Daily usage x Lead period) + Safeguard stock
For the given question;
Lead time = 6 days
Safety stock = 2 days x 600 bars = 1200 bars
ROP = (600 x 6) + 1200 = 4800 bars.
Thus, the re-order point (ROP) for the new batch of the bars of soaps be placed when there is 4800 bars left in the inventory.
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