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Question

_____________ represents that quantity of material which is normally ordered when a particular material reaches re-ordering level.

A
Maximum level
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B
Re-order level
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C
Minimum level
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D
Re-order quantity
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Solution

The correct option is D Re-order quantity
Reorder quantity is the magnitude or the number of units to be ordered in a new purchase order for the fresh supply of a particular inventory item.
Re- order level is the level of inventory which triggers an action to replenish that particular stock. It is a minimum level of stock which a firm need to maintained. Re order quantity is basically depends on the two major element i.e. lead time and average usage.


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