Given a non-perishable medicine with lead time 10 days, average daily usage 20 units, and safety stock 100 units, what is the Reorder Level (ROL)?

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Multiple Choice

Given a non-perishable medicine with lead time 10 days, average daily usage 20 units, and safety stock 100 units, what is the Reorder Level (ROL)?

Explanation:
Reorder level is the stock level at which you trigger a new order to avoid a stockout during the replenishment period. It should cover demand during the lead time plus a safety cushion. Calculate the demand during lead time: 20 units per day × 10 days = 200 units. Add the safety stock of 100 units to cover uncertainties: 200 + 100 = 300 units. Therefore, the reorder level is 300 units. The other options either miss the safety stock (200) or misallocate it (400, 100), but the correct approach combines both lead-time demand and safety stock.

Reorder level is the stock level at which you trigger a new order to avoid a stockout during the replenishment period. It should cover demand during the lead time plus a safety cushion.

Calculate the demand during lead time: 20 units per day × 10 days = 200 units. Add the safety stock of 100 units to cover uncertainties: 200 + 100 = 300 units. Therefore, the reorder level is 300 units. The other options either miss the safety stock (200) or misallocate it (400, 100), but the correct approach combines both lead-time demand and safety stock.

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