Compute the reorder point for TTT Inc.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
TTT Inc. sells 100,000 tea bags a year. Other data are as follows:
Selling price/bag=P2.50
Purchase cost/bag =P1.50
Ordering cost =P5.40/order
Carrying cost=20% of unit cost
Operating days per year=250
Ave. lead time on purchases=6 days
Maximum lead time=13.5 days
Compute the reorder point for TTT Inc.
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