Demand Forecast Forecast Standard Deviation Lead Time Carrying Cost 620 cases per day 74 cases per day 12 days 32% per year Purchase Price $67 per case Delivery Cost to Warehouse $12 per case Ordering Cost $60 per order Stockout Cost $124 per case Desired probability of being in stock P=96% during lead time You are trying to determine a new strategy for managing the product's inventory and scheduling the resupply of your warehouse. You have two basic options, I) a Reorder Point Plan or 2) a Periodic Review Plan. You know that you can install an inventory management system that would allow an automated ROP system to operate for $25,000 a year. You also know that if you use a PR inventory system, it costs you an additional $200 per order to confirm the inventory count. You can consider established your order size using either the EOQ or DDLT concept. Create a recommended ROP inventory strategy. (10 points) A B Create a recommended PR inventory strategy. (10 points) C What are the expected yearly costs (ordering, cycle and safety stock, COLS, and total) of the two strategies (ROP and PR)? (10 points) D What are the expected service levels (fill rates) of the two strategies (ROP and PRI? (5 points) F Which strategy (ROP or PR) do you recommend and why? (5 points) What would your ROP strategy be if there was also a Lead Time Standard Deviation of 0.45 weeks? (10 points) Show all calculations set up as a presentation to management.