A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead-time for the item is six weeks, and it costs the company $30 to process each order. The holding cost for each unit is $10 per year. The company operates 52 weeks per year. (for z values refer to normal distribution table in the textbook, pg 599 OR you can use excel functions)
What is the reorder point level if the company has a policy of maintaining a 90% cycle-service level?
a. less than or equal to 200 units
b. greater than 200 but less than or equal to 300 units
c. greater than 100 but less than or equal to 150 units
d. greater than 300 but less than or equal to 400 units