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. Use the following information to determine the best order size and the reorder point:

Annual demand 3,500 mufflers Ordering cost $50 per order Standard deviation of 6 mufflers per Service probability 90%
daily demand working day Item cost $30 per muffler Lead time 2 working days Annual holding cost 25% of item value Working days 300 per year 22 Alpha Products, Inc., is having a problem trying to control inventory. There is insufficient time to devote to all its items equally. Here is a sample of some items stocked, along with the annual usage of each item expressed in dollar volume.
ITEM ANNUAL DOLLAR USAGE ITEM ANNUAL DOLLAR USAGE a $ 7,000 k $80,000 b 1,000 l 400 c 14,000 m 1,100 d 2,000 n 30,000 e 24,000 o 1,900 f 68,000 p 800 g 17,000 q 90,000 h 900 r 12,000 i 1,700 s 3,000 j 2,300 t 32,000

a. Can you suggest a system for allocating control time?

b. Specify where each item from the list would be placed.