Which description matches Re-Order Quantity?

Which description matches Re-Order Quantity?

• A. The time between placing the order and receiving it
• B. The number of items ordered each time stock is replenished
• C. The level at which new orders are placed
• D. The total cost of ordering

Answer: (B)

The main idea is that Re-Order Quantity is the amount of stock you order each time you replenish your inventory. It defines the size of each replenishment batch and determines how much stock you add when you place an order. This is different from lead time, which is the waiting period between ordering and receiving stock, or from the reorder point, which is the stock level that triggers a new order, or from the total cost of ordering, which sums up the costs of placing orders. In practice, choosing the right quantity helps balance costs: ordering in larger quantities lowers ordering costs but raises holding costs, while smaller quantities raise ordering costs but reduce holding costs. So the description that matches the quantity ordered in each replenishment is the correct one.

The main idea is that Re-Order Quantity is the amount of stock you order each time you replenish your inventory. It defines the size of each replenishment batch and determines how much stock you add when you place an order. This is different from lead time, which is the waiting period between ordering and receiving stock, or from the reorder point, which is the stock level that triggers a new order, or from the total cost of ordering, which sums up the costs of placing orders. In practice, choosing the right quantity helps balance costs: ordering in larger quantities lowers ordering costs but raises holding costs, while smaller quantities raise ordering costs but reduce holding costs. So the description that matches the quantity ordered in each replenishment is the correct one.