Kaufheim AG of Dresden, Germany, distributes medical supplies throughout Germany. Selected information relating to a quick-developing X-ray film carried by the company is given below:

Management is trying to determine the proper safety inventory to carry on this item and to determine the proper reorder point.

Required

1. Assume that no safety inventory is to be carried. What is the reorder point?

2. Assume that a full safety inventory is to be carried.

(a) What would be the size of the safety inventory in units?

(b) What would be the reorder point?

Transcribed Image Text:

Economic order quantity (EOQ) Maximum weekly usage Lead time Average weekly usage 700 units 60 units 4 weeks 50 units