The $$Try to Have Just One$($THJO$)$ sunflower seed company roasts and seasons sunflower seeds

$($in shell$).$ For their production, they require a specific type of oil that they source from a local

supplier; the lead time on orders is $3$ days. The oil comes in a box lined with plastic, with each

box of oil costing THJO $$72($this is the product cost$).$ Demand averages $100$ boxes per day, with

a standard deviation of $26($assuming they run production $365$ days$/$year$).$

Ordering is done by a Procurement Specialist working at THJO and requires checking with

the Production Department to see if any plans might cause a sudden change in demand,

creating a purchase order $($PO$),$ transmitting the PO by email and following up with the supplier,

and then processing the product receipt and invoice when the product arrives $$ a recent study

by the Procurement department estimates a total administrative cost of $$30$ per PO

$($independent of order quantity$)($this is the ordering cost per order$).$

Typically, inventory holding cost is a percentage of the product cost. The Accounting and

Finance Department has requested that a rate of $19\%$ be used when determining inventory

holding costs $($this includes the cost of capital, insurance, variable storage, and other costs that

vary with the amount of inventory on hand$).($For the sake of this analysis, ignore seasonality in

demand and any quantity discounts or transportation costs.$)$ Currently, they order Q $=500$

when inventory reaches R $=350$ boxes.

$1.(5\mathrm{.}5$ points$)$ Diagram their current ordering policy in a $$sawtooth$$ diagram that clearly

labels the order quantity, reorder point, cycle stock, average cycle stock, safety stock

and lead time. Start time zero with $450$ units on hand $($so your first order will be placed

on day $1).$

$*$Hint $$ Cycle stock is a changing variable while average cycle stock is a constant. They are

two different concepts.

$*$ NOTE $$ Equations and calculations are tangible ways to implement a concept, but note

that the concept is important as well $$ be sure to understand what you are doing and why,

and not just how to make the calculation when completing this assignment.