1. REORDER POINT
SAFETY STOCK

2. ROP
the level at which inventory needs to be
replenished so it doesn't drop below a
certain threshold where it is at risk of
going out of stock.

3. Formula:
ROP =(LEAD TIME IN DAYS x
AVERAGE DAILY SALES
VOLUME)+ SAFETY STOCK

4. SAFETY STOCK(Buffer Stock)
an extra quantity of a product which is
stored in the warehouse to prevent an out-
of-stock situation. It serves as insurance
against fluctuations in demand.

5. Formula:
SAFETY STOCK =(MAX DAILY
SALES VOLUME x MAX LEAD
TIME) - ( AVERAGE DAILY
SALES VOLUME x AVERAGE
LEAD TIME)

6. Simple Problem 1.
Aiko Labda sells products with an average daily sales
volume of 30 units. The lead time for replenishment
is 7 days. The maximum daily sales volume is 50
units, and the maximum lead time is 10 days.
Calculate the reorder point using the provided
formulas.

7. Simple Problem 2
Ga Gym-gym na daw siya manufacturing plant
produces a component with an average daily
sales volume of 40 units. The lead time for
replenishment is 4 days. The maximum daily
sales volume is 60 units, and the maximum lead
time is 6 days. Calculate the reorder point.

8. Simple Problem 3.
Pa Kurentehi ko electronics store sells an
average of 50 gadgets per day. The lead time
for restocking is 7 days. The maximum daily
sales volume is 80 gadgets, and the maximum
lead time is 10 days. Calculate the reorder point.

9. Simple Problem 4.
Manhida sa unggoy uy hardware store sells an
average of 40 tools per day. The lead time for
restocking is 4 days. The maximum daily sales
volume is 60 tools, and the maximum lead time
is 8 days. Calculate the reorder point.

10. Simple Problem 5
Hawda mo kumot Bakery sells an average
of 50 loaves of bread per day. The lead
time for restocking is 6 days. The
maximum daily sales volume is 80 loaves,
and the maximum lead time is 10 days.
Calculate the reorder point.

11. Bonus Problem
Luffy is a retailer of Taiwanese made cell phones. It will probably take a
couple of day for the supplier to pick and box the cell phone, assuming the
provider is always in stock a has a warehouse full of cell phones ready to
ship at a moment’s notice. The cell phone spends another six days in a truck
on its way to the port, after which they ship it from Korea to the Philippines,
which takes roughly about 40 days. The cell phones are held at customs for a
couple of weeks before being transported to Luffy’s store for another couple
of days. On average days, they can sell up to 8 cell phones. On weekends
they can sell up to 15 cell phones. When the weather is good, the lead time is
as usual, but during rainy seasons or when the weather is bad, it might reach
up to 80 ays. Compute ROP