D = Average demand per period

sD = Standard deviation of demand (forecast error) per period

L = Average lead time - between when an order is placed and when it is received

sL = Standard deviation of lead time per order

ss = Safety Stock (derived in previous question)

Reorder Point (ROP) = ss + (D*L)

Cell-Phones-For-Less sells a large quantity of prepaid cell phones, on average 1500 per week with a standard deviation of 145. The lead time for the prepaid cell phones is five weeks with a standard deviation of two weeks. The owner continuously monitors inventory. Their typical order size is 4500 phones.

What is the Reorder Point for Cell-Phones-For-Less?

Select one:

a. 14,532 phones

b. 10,518 phones

c. 8,532 phones

d. 4,518 phones