In the par level example, which quantity is used to adjust the calculation before determining how many to buy?

In the par level example, which quantity is used to adjust the calculation before determining how many to buy?

• A. 2 cases on hand
• B. 8 case par level
• C. 1 case used between order and delivery
• D. 4 cases in transit

Answer: (C)

Planning for lead time is the key idea. When you decide how many units to order to reach your par level, you must account for how much will be used while you’re waiting for the new stock to arrive. That lead-time consumption is the amount you adjust for, so you don’t run short before the replenishment arrives. In the par level calculation, the quantity used between placing the order and delivery represents this expected consumption during the wait. It’s the factor that ensures you cover demand in that waiting period, not just what you currently have on hand or what’s already on the way. Two on hand describes existing stock, and four in transit describes stock already ordered but not yet received; neither alone captures the amount you’ll need to use during lead time. The lead-time usage amount is the proper adjustment to determine how many to buy.

Planning for lead time is the key idea. When you decide how many units to order to reach your par level, you must account for how much will be used while you’re waiting for the new stock to arrive. That lead-time consumption is the amount you adjust for, so you don’t run short before the replenishment arrives.

In the par level calculation, the quantity used between placing the order and delivery represents this expected consumption during the wait. It’s the factor that ensures you cover demand in that waiting period, not just what you currently have on hand or what’s already on the way. Two on hand describes existing stock, and four in transit describes stock already ordered but not yet received; neither alone captures the amount you’ll need to use during lead time. The lead-time usage amount is the proper adjustment to determine how many to buy.