Consider the following conditions for an item used in the Hess Companys

Question

Consider the following conditions for an item used in the Hess Company's manufacturing process:

On-hand inventory:	80 units
Open orders (scheduled receipts):	100 units
Backorders:	20 units
Reorder point:	150 units
Quantity per order:	50 units

Which of the following statements best describes Hess's situation regarding inventory replenishment?

A) No action is required, since Hess's inventory position is greater than the reorder point.

B) Hess should order one lot of 50 units to cover its backorders.

C) Because it is incurring backorders, Hess should increase its reorder point.

D) Hess should place an order for 50 units, since their inventory position is less than the reorder point.

Answer

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