 Students, now let us look at an example for an EOQ, the basic model. You are well versed with that model, just refresh it. Now let's say we have an XYZ corporation that buys one of the key components of its final product from ABC Corporation. The component has an annual demand of 8,000 units. So this would be my T. The cost of placing an order is $40. So the ordering cost, the cost of placing an order would be $40. The unit purchase cost, purchase price, transportation cost, and unit storage cost of the items are $5, $0.5 and $0.10 respectively. So unit purchase price is $5, transportation cost is $0.50 and unit storage cost per unit is $0.10. The transit time is 10 days and the lead time is about 15 days. Assuming an interest rate of 10% compute the economic order quantity and reorder point are. So we had that expression with us. What we need to do, we just need to put the values. 2AD over I into C plus T plus small t, which was your S, it was S, the storage cost. And what we have after solving it, the Q is approximately 992 units. Now I will not go into the depth, if the units are like not discrete in nature, you know that what to do from your previous courses. So here I just assume it to be 992 units. The reorder point R is given by the lead time multiplied by the number of units needed per day. Here my reorder point would be lead time, lead time is 15 days and my yearly demand is 8,000. I will just simply divide, multiply these two numbers LD and thus divided by 365. That will give me my reorder point, which in this case would be 328 units. What does it mean? I will always order 992 units and whenever I am left with the inventory of 328 units, I will reorder again. This is my reorder point. The policy would be set like 992, if it falls to 328, it would be ordered again. Students, now from this example, we haven't included the safety stock in it. Assuming that safety stock, there is like a little variation in the demand. So that is why safety stock is not there. But most of the time, in reality or in real practice, you would require a safety stock to actually cater the variation of the demand. It's just not there. In that example, why it is not there? That is just for a simplicity. But just keep it in mind, reorder point actually includes the safety stock and if you have a safety stock, you need to calculate it and you need to incorporate it into your reorder point. Thank you.