Question: The factory sources a component for assembling a special product from a local supplier who has promised a lead time of 5 days and, with

The factory sources a component for assembling a special product from a local supplier who has promised a lead time of 5 days and, with a standard deviation of 1 day. The daily demand for one component that is used by factory is 350, with a standard deviation of 30. Inventory manager has calculated the ordering cost to be 10 and holding cost to be 0.30/component /year. Factory is expected to run throughout the year. Based on the information provided, calculate the reorder point for the component if management wants to have a 99 percent cycle-service level? (Z value: 2.33)

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