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Palin's Muffler Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to
Palin's Muffler Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to manage inventory of this standard muffler. Use the information in the following table to determine the optimal inventory target level (or order-up-to level). Annual demand Standard deviation of daily demand. Item cost Annual holding cost Review period Optimal target level b. If the service probability requirement is 91 percent, the optimal target level will: Decrease mufflers 3,080 6 mufflers per working day $35.00 per muffler 37% of item value 23 working days a. What is the optimal target level (order-up-to level)? (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.) Increase Stay the same Ordering cost Service probability Lead time Working days $ 85 92 per order 2 working days % per year 280
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