Refer to the original data given in Exercise III–5 for Fiber Technology, Inc. The lead time required to receive an order of XL-20 is one month.

Required:

1. Assuming stable usage of XL-20 each month, determine the reorder point for XL-20.

2. Draw a graph showing the usage, lead time, and reorder point for XL-20.

3. Suppose that monthly usage of XL-20 fluctuates between 300 and 500 canisters, although annual demand remains constant at 4,800 canisters. What level of safety stock should the materials and parts manager keep on hand for XL-20? What is the new reorder point for the chemical?