Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Paulin’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 table to determine the optimal inventory target level (or order-up to level).
Annual demand 3,910 mufflers ordering cost $75 per order
S/D of daily demand 6 mufflers/wk. day service probability 87%
Item cost $ 27.00 per muffler lead time 2 wk. Days
Annual holding cost 36 % of item value wk. Days 230 per year
Review period 18 working days
- What is the optimal target levels (order up to levels) use excels NORMSINVI() function to find the correct critical value for the given a-level. Do not round intermediate calculations. Round value 2 decimal places and final answer to the nearest whole number
- If the service probability is 90%, the optimal target level will increase, decrease or stay the same?
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