Compute the reorder point when daily demand is 25 units, orders are placed every 15 days, the lead time is 10 days, the desired service level is 98% (which corresponds to 2.06 standard deviations from the mean), 50 units are on hand and the standard deviation of daily demand during the uncertainty period is 10 units.
The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four (4) days. Assume 365 days in a year.
A) 525 units
B) 678 units
C) 362 units
D) 475 units
B) 678 units
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