Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days.

Required:

1. Calculate the reorder point, using (Reorder point = Rate of usage x Lead time). fill in the blank 1 units

2. Select the graph that displays the appropriate reorder point.

a.	b.
c.	d.

Correct answer is

3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?

fill in the blank 3 units