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Effect of safety stock on reorder point

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A company normally orders the EOQ of 120 units and the reorder point is 30 units. However, due to changing conditions, it has become necessary for the company to carry safety stock to prevent stock outs. Which of the following should occur?

a. the order quantity will increase.
b. the order quantity will decrease.
c. the reorder point will increase.
d. the reorder point will decrease.

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Solution Summary

The solution discusses the effect of safety stock on reorder point.

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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