A Japanese appliance manufacturer uses a valve in its refrigerator final-assembly operation. The valve is obtained from a local supplier in any quantity needed within one hour of an order request. The working day is eight hours. The production schedule calls for this part to be used at the constant rate of 2,000 per day, 250 working days a year. The company pays ¥35 for this valve delivered to the assembly line. Inventory-carrying costs are 30 percent per year. Due to contractual arrangements with the supplier, procurement costs amount to only ¥1.00 per order placed.
a. Design a reorder point method of inventory control for this item.
b. Suggest how a two-bin system could be used as a way of implementing this control method.