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Xavier L is the purchasing agent for Central Valve Company, which sells industrial valves. One of Central's most popular valves has an annual demand of

Xavier L is the purchasing agent for Central Valve Company, which sells industrial valves. One of Central's most popular valves has an annual demand of 4000 units. The cost of each valve is $90 and the inventory carrying cost is estimated at 10% of the cost of each valve. Betsy has made a study of the costs involved in placing an order and has concluded that the average ordering cost is $25 per order. Furthermore it takes about 5 working days for an order to arrive from the supplier. Assume 250 working days per year.Assume that the demand is random, with a daily average of 16 units (4000/250), and a daily standard deviation of 4 units. What is a reorder point with a 98% service level?

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