Sarah's Muf?er Shop has one standard muf?er that ?ts a large variety of cars. Sarah wishes to establish a reorder point system to manage inventory of this standard muf?er. Use the following information to determine the best order size and the reorder point:
Annual demand 3,500 muf?ers
Ordering cost $50 per order
Standard deviation of daily demand 6 muf?ers per
working day
Item cost $30 per muf?er
Annual holding cost 25% of item value
Service probability 90%
Lead time 2 working days
Working days 300 per year