Re-order level given maximum consumption 200 units/day and maximum lead time 12 days is:
A1,200 units
B2,000 units
C2,400 units
D1,800 units
Answer & Solution
Correct answer: C. 2,400 units
1. Re-order level = maximum consumption × maximum lead time.
2. Maximum consumption = 200 units/day; maximum lead time = 12 days.
3. Re-order level = 200 × 12 = 2,400 units.
4. The other options ignore one of the two extremes.
_Source: ICAI BoS Inter Paper 3, Ch 2 "Material Cost", §2.4.5 ¶2_
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