What reorder point should be used

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Reference no: EM13252571

A company stocks a component that cost $40 per unit. Annual demand for the item is 3120 units. The company is open for business 52 weeks per year, so weekly demand averages 60 units, with a standard deviation of 10 items. Past experience with their supplier indicates that the replenishment lead time (the time from ordering more items to receipt of the shipment of those items) is 9 weeks. A 90% service level is desired, so the safety factor (from a standard normal distribution table) is 1.30. What reorder point should be used?

Reference no: EM13252571

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