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Entrepreneurship · 2026 · 1 mark

CBSE 2026 · Central · Set 4 · Q17

‘Zen MotoCorp’, a leading motorcycle manufacturer, requires batteries for its production units. The procurement lead time is two months and the…

‘Zen MotoCorp’, a leading motorcycle manufacturer, requires batteries for its production units. The procurement lead time is two months and the demand during this period is expected to be $\displaystyle 2000$ batteries per month, making its reorder point at $\displaystyle 4000$ batteries. Fresh supplies should arrive just as the stock reaches zero. However, due to variability in the rate of demand (or consumption) as well as in the supply or manufacturing lead time etc., it may reach a zero stock status before the supply arrives. To cater to such variability, it decides to add $\displaystyle 500$ batteries to its reorder level. The reorder level would now be $\displaystyle 4500$ batteries. The addition of $\displaystyle 500$ batteries in the reorder point is known as:
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