Question

Re-ordering level $=$ ________ $\times$ Maximum re-order period.

• A. Average re-order period
• B. Maximum usage
• C. Maximum consumption
• D. Normal usage

Answer 1

The correct option is C Maximum consumption

Re-Order level is the level of inventory where business need to place the sufficient order for replenishment of inventory by keeping the safer stock.

Re-order level can be calculated keeping in mind the lead time and maximum consumption.