The KAB Corporation’s daily demand for item XYZ is normally distributed with a mean of 50units. The replenishment lead time is 10 days, and the standard deviation of demand during leadtime is 12.65 units. The order cost is $40 and the unit holding cost per year is $3. KAB operates 365 days per year.
Part A: What is the order size?
Part B: What is the reorder point if a 90% cycle service level is desired?
Part C: If the reorder point is instead set at 505, what is the implied cycle service level chosen by the company?