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basic EOQ model, we assumed the order is filled instantaneously. In other words, the model assumed the procurement lead time' is zero. This is not true always. In this section, we relax the lead time assumption to make the model more realistic. At the time of placing an order, the level of inventory on hand should be such that it can satisfy the demand during the lead time. Clearly, this level of inventory is a function of the consumption during lead time. This level, also referred to as reorder level, s, can be mathematically expressed as s=Lxd (3.11) where L is the lead time, in days, and d is the daily demand. In Rosetta's running example case, if the procurement lead time for vegetable oil is 7 days, the reorder level is S = 7 7200 360 = 140 liters Here, we assume Rosetta's is working 360 days a year. The inventory control policy for Rosetta's based on a continuous review, fixed order quality (s. Q) system can be stated as follows (see also Fig. 3.3): When the on-hand inventory level of vegetable oil goes down to 140 liters we place an order for 438 liters h8 Order Quantity Q.438 iters Reorder Level = 140 hrs 7 days Onder anves Time Place order - Replenishment policy for Rosetta's based on (s.Q system 'Procurement lead time is time between placing an order and receipt of the same. ? Also called reorder point. A firm sells an item that has an annual demand of 1000 units. If the procurement lead time is a constant 5 days, find the reorder level. Assume 365 workdays a year