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Problem 20-36 (Algal Palin's Mufer Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic reviewsystem
Problem 20-36 (Algal Palin's Mufer Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic reviewsystem to manage inventory ofthis standard mufer. Use the information in the following table to determine the optimal inventory target level [or orderupto level]. Annual demand 3,886 mufflers Ordering cost 5 85 per order Standard deviation of dailyr demand 6 mufflers per marking day Service probability 92 5 Item cost $35.66 per muffler Lead time 2 working days Annual holding cost 3? % of item value Working days 288 per year Review period 23 working days a. What is the optimal target level {orderupto level]? {Use Excel's NORMSINW} function to nd the correct critical value for the given dlevel. Do not round intermediate calculations. Round "2" value to 2 decimal places and nal answer to the nearest whole number.) b. lfthe service probability requirement is 91 percent, the optimal target level will: 0 Decrease @ Increase 0 Stay the same
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