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A fertilizer plant acquires phosphate from a single source. The plant's weekly phosphate requirement has a normal distribution with a mean of 7 2 0

A fertilizer plant acquires phosphate from a single source. The plant's weekly phosphate requirement has a
normal distribution with a mean of 720 metric tons and a standard deviation of 20 metric tons. The lead time for
phosphate supply is 9 days ( ~~1.286 weeks). To place an order, an administrative employee spends around one
hour reviewing the inventory level, preparing the order, tracking the delivery, and updating records. When the
delivery is received, it takes roughly one worker hour to unload, inspect, and store the material in a warehouse.
The administrative staff member is paid $25 per hour and the warehouse employees are paid $16 per worker
hour. Delivery charges are $650 per shipment. The company purchases phosphate at $400 per metric ton. The
annual cost of capital is 4.5%. Other holding costs are negligible. How much should the plant order at a time?
What will be the Reorder Point if the desired service level during the lead time is 95%?
(Consider 52 weeks in a year for planning. Show your working for the answers.)
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