United airlines has an agreement to buy jet fuel from exxon, Ask an Expert

Management Studies

United Airlines has an agreement to buy jet fuel from Exxon. The goal is to minimize total cost (i.e., ordering cost + holding cost). The annual demand for fuel is 56,000 barrels. Exxon charges United $3100 to process each order. United incurs a holding cost of $29 per barrel.

The standard deviation of daily demand is 17 barrels per day. What is the inventory level (re-order point) at which United needs to place an order if the lead time for orders is 8 days and the desired service level is 95% (hint: there is a z-table calculator in Moodle)?

Note: round your answer to the nearest whole number. For example, answer like 1234.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93130989

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