D is corrent. The lead time multiplied by the usage per day expected during lead time yields the reorder point. The most common approach to setting the optimum safety-stock level is to examine previous lead time periods to determine the probabilities of running out of stock (a stockout) for different assessed levels of safety stock. Cost is used to determine the amount to be ordered, known as the economic order quantity, not when to reorder.
A is incorrect. Cost is not used.
A is incorrect. Cost is not used.
A is incorrect. Cost is not used.
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