Required information

[The following information applies to the questions displayed below.] Fiber Technology, Inc., manufactures glass fibers used in the communications industry. The company's materials and parts manager is currently revising the inventory policy for XL-20, one of the chemicals used in the production process. The chemical is purchased in 10-pound canisters for $107 each. The firm uses 6,000 canisters per year. The controller estimates that it costs $162 to place and receive a typical order of XL-20. The annual cost of storing XL-20 is $5.20 per canister.

Now also assume that the lead time required to receive an order of XL-20 is one month. Required:

1. Assuming stable usage of XL-20 each month, determine the reorder point for XL-20.

3. Suppose that monthly usage of XL-20 fluctuates between 400 and 600 canisters, although annual demand remains constant at 6,000 canisters. What level of safety stock should the materials and parts manager keep on hand for XL-20? What is the new reorder point for the chemical?

Complete this question by entering your answers in the tabs below. Required 1 Required 3 Assuming stable usage of XL-20 each month, determine the reorder point for XL-20. (Round your answer to nearest whole number.) Reorder point canisters Required 1 Required 3 Suppose that monthly usage of XL-20 fluctuates between 400 and 600 canisters, although annual demand remains constant at 6,000 canisters. What level of safety stock should the materials and parts manager keep on hand for XL-20? What is the new reorder point for the chemical? (Round your answer to nearest whole number.) canisters Safety stock New reorder point canisters