A local service station is open 7 days per week, 365 days per year. Sales of grade premium oil average 20 cans per day. Inventory holding costs are $0.75 per can per year. Ordering costs are $15 per order. Lead time is one week.

a- Calculate the economic order quantity and reorder point.

b- The boss is concerned about this model because demand really varies. The standard deviation of demand was determined from a data sample to be 5.5 cans per day. The manager wants a 98 percent service probability. Determine a new inventory plan based on this information and the data in a. Use Qopt from part a.