Question: Andrew and Fulton, Inc., uses 1,320 tons of a chemical bonding agent each year. Monthly demand fluctuates between 95 and 125 tons. The lead time for each order is one month, and the economic order quantity is 220 tons.
Required: Determine the safety stock appropriate for the chemical bonding agent. At what order point, in terms of tons remaining in inventory, should Andrew and Fulton, Inc., order the bonding agent?