Reorder Points & Safety Stock — Assessment

1. What is the basic reorder point formula?

Price × quantity Average daily demand × lead time + safety stock Total sales ÷ branches Random guess

2. What does safety stock protect against?

Staff turnover Demand spikes and late supplier deliveries Currency changes Tax audits

3. A warehouse has its own minimum and maximum set for an item. What happens when the nightly reorder-point job runs?

The warehouse minimum becomes the item reorder point Only the item's reorder point is recalculated; the warehouse levels are kept The warehouse levels are overwritten Both are deleted

4. An item’s reorder point is set to Manual. What does the nightly recalculation do with it?

Overwrites it with the computed figure Sets it to zero Switches the item back to Automatic Leaves the figure you typed as it is

5. A SKU sells 20/day with a 5-day lead time. Roughly what is the demand-during-lead-time?

100 units 25 units 1,000 units 5 units

6. An Automatic item sells steadily at the till, but its reorder point never changes from night to night. What is the most likely reason?

The supplier was deleted It has no lead time and no safety stock, so the job leaves the point as it is Till sales are not counted as demand The item is discontinued

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