Question: Problem 1 1 - 2 7 ( Static ) Sarah's Muffler Shop has one standard muffler that fits a large variety of cars. Sarah wishes

Problem

11 - 27 (

Static

)

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.

Annual demand

3, 500

mufflers

Standard deviation of daily demand

6

mufflers per working day

Item cost $

30

per muffler

Annual holding cost

25 %

of item value

Ordering cost $

50

per order

Service probability

90 %

Lead time

2

working days

Working days

300

per year

Use the above information to determine the best order size and the reorder point

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