If the supply lead time is uncertain, and demand during the lead time is also uncertain, there should be a safety level of inventory. A company may wish to ensure that they are never out of stock. The reorder level to achieve this is found as:

Q. If the supply lead time is uncertain, and demand during the lead time is also uncertain, there should be a safety level of inventory. A company may wish to ensure that they are never out of stock. The reorder level to achieve this is found as:

A.            Maximum demand for the material item per day/week × Maximum supply lead time in days/weeks

B.            Demand for the material item per day/week × Lead time in days/weeks

C.            Both A&B

D.            None

Answer: Maximum demand for the material item per day/week × Maximum supply lead time in days/weeks