Discussion
If the lead time is \(m\) periods and usage rate is \(u\), the re-order stock level is given by :
Answer: D
The re-order level is \(m \cdot u\).
An order placed now arrives after the lead time of \(m\) periods, during which \(m \cdot u\) units are used. To avoid running out before the delivery, the order must be placed when the stock falls to exactly the lead-time demand, \(m \cdot u\) (plus any safety stock, which this simple model omits).
Q/2 is the average inventory in the EOQ model, \(Q/u - m\) is a time (cycle length minus lead time), and \(m\) alone is a number of periods, not a stock level.
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