Consider the following conditions for an item used in the Hess Company's manufacturing process:
On-hand inventory: 40 units
Open orders (scheduled receipts): 100 units
Backorders: 60 units
Reorder point: 100 units
Quantity per order: 50 units
Which of the following statements best describes Hess's situation regarding inventory replenishment?
A) No action is required, since a scheduled receipt is due to be delivered to Hess.
B) To cover its backorders, Hess should order two lots of 50 units.
C) Because it is incurring backorders, Hess should increase its reorder point.
D) Hess should place an order for 50 units, since the inventory position is less than the reorder point.
D
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