The reorder point must cover expected demand during replenishment lead time plus the safety inventory maintained to protect against uncertainty.
Average demand during lead time is:
200 units per day × 5 days = 1,000 units
Adding the required safety stock:
1,000 + 300 = 1,300 units
Therefore, the replenishment order should normally be triggered when the inventory position reaches 1,300 units , making option C correct.
The reorder point addresses when to order , whereas the replenishment lot-size decision addresses how much to order . Confusing these two decisions can lead to either excessive inventory or avoidable stockouts.
Safety stock provides protection when actual demand exceeds expected demand or when replenishment takes longer than planned. Without safety inventory, a company operating with deterministic lead-time demand would place its order at 1,000 units. Adding the 300-unit buffer raises the trigger point accordingly.
Inventory and warehousing, demand planning, scheduling, and the relationships among these functions are explicitly included within the ACSCP examination scope.
Reference Topic: Inventory, Forecasting and Demand Planning — Reorder Point, Lead-Time Demand, and Safety Stock.
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