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United Airlines has an agreement to buy jet fuel from Exxon. The goal is to minimize total cost (i.e., ordering cost + holding cost). The annual demand for fuel is 47,000 barrels. Exxon charges United $2400 to process each order. United incurs a holding cost of $29 per barrel.
The standard deviation of daily demand is 18 barrels per day. What is the inventory level (re-order point) at which United needs to place an order if the lead time for orders is 14 days and the desired service level is 95% (hint: there is a z-table calculator in Moodle)?
Note: round your answer to the nearest whole number. For example, answer like 1234 there is a difference between daily std dev and std dev of demand during lead time.
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