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 daily demand 6 mufflers per working day Service probability 90%

Item cost $30 per muffler Lead time 2 working days Annual holding cost 25% of item value Working days 300 per year 1002W