Question related to reorder point

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Reference no: EM1368979

Question related to Reorder Point

Sarah's Muffler Shop has one standard muffler that fits a large variety of cars. Sarah wishes to establish a reorder point system to manage inventory of this standard muffler. Use the following information to determine the best order size and the reorder point:

Annual demand 3,500 mufflers

Ordering cost $50 per order

Standard deviation of daily demand 6 mufflers per working day

Item cost $30 per muffler

Annual holding cost 25% of item value

Service probability 90%

Lead time 2 working days

Working days 300 per year

Reference no: EM1368979

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