Muscle Bound is chain of fitness stows located in many large shopping centers. Recently, an internal memo from the CEO to all operations personnel complained about the budget overruns at Muscle Bound’s central warehouse, In particular, she said that inventories were too high and that the budget will be cut dramatically and proportionately equal for all items in sock. Consequently, warehouse management set up a pilot study to see what effect the budget cuts would have on customer service. They chose 5-pound barbells, which are a high volume SKU and consume considerable warehouse space. Daily demand for the barbells is 1,000 units, with a standard deviation of 150 units. Ordering costs are $40 per order. Holding costs are $2/unit year. The supplier is located in the Philippines; consequently, the lead time is 35 days with a standard deviation of 5 days. Muscle Bound stores operate 313 days a year (no Sundays).

Suppose that the barbells are allocated a budget of S 16,000 for total annual costs. If Muscle Bound uses a continuous review system for the barbells and cannot change the ordering costs and holding costs or the distributions of demand or lead time, what is the best cycle- service level management can expect from their system?