OrangeTree Pharma should order 1,000 units of raw materials every 5 days in order to maintain the necessary inventory level for the production of test tubes. This will ensure that the company is able to meet its demand for test tubes and that it does not run out of raw materials.
In order to calculate the level of inventory that OrangeTree Pharma should place an order for, we must first calculate the average daily usage of test tubes. This can be done by taking the annual demand of 72,000 units and dividing it by the total number of days in the year (360 days). This gives us an average daily usage of 200 units.
Now that we have the average daily usage of test tubes, we can calculate the inventory level that should be placed per order. To do so, we must take the average daily usage and multiply it by the lead time of five (5) days. This gives us 1,000 units as the inventory level that should be placed per order.
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