Tic Tac Electricals Ltd. manufactures switches and plugs in an industrial area in the state of Haryana. On an average, they manufacture 2500 switches per day. Their raw material supplier is based in Punjab and takes 5 days to deliver the requirement once the order is received. Estimate the reorder level for Tic Tac Electricals Ltd.

Question

Accepted Answer

Given:
- Average daily production (daily demand) = 2,500 switches
- Procurement lead time = 5 days

**Reorder Level** = Average Daily Usage × Lead Time
= 2,500 × 5
= 12,500 switches

Tic Tac Electricals Ltd. should place a new order when the stock of raw material reaches **12,500 switches**. This ensures that fresh supplies arrive before the existing stock is depleted, preventing any production stoppage.