Cost and Management AccountingQuestion 5441 of 251
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3. Assuming that the company is willing to take a 15% risk of being out of stock, what would be the safety stock and the Re-order point?

Options

ASafety stock 1050 batteries and Re-order point 2250 batteries
BSafety stock 2250 batteries and Re-order point 1050 batteries
CSafety stock 1450 batteries and Re-order point 2850 batteries
DSafety stock 1250 batteries and Re-order point 2650 batteries
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Correct Answer

✅ Option A — Safety stock 1050 batteries and Re-order point 2250 batteries

All Options:

  • ASafety stock 1050 batteries and Re-order point 2250 batteries ✓
  • BSafety stock 2250 batteries and Re-order point 1050 batteries
  • CSafety stock 1450 batteries and Re-order point 2850 batteries
  • DSafety stock 1250 batteries and Re-order point 2650 batteries

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Detailed Solution & Explanation

Based on the case study parameters for Skylark Electronics, the safety stock and the Re-order point are determined. If the company is willing to take a 15% risk of being out of stock:
1. **Safety Stock:** 1,050 batteries
2. **Re-order Point:** 2,250 batteries (as specified in Option A).
Hence, **Option A** is the correct answer.

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