Problem 20-36 (Algo) 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 3,200 mufflers Ordering cost $ 30 per order Standard deviation of daily demand 6 mufflers per working day Service probability 95 % Item cost $21.00 per muffler Lead time 2 working days Annual holding cost 37 % of item value Working days 200 per year Review period 17 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.) ‘ptimal target level M 347| b. If the service probability requirement is 90 percent, the optimal target level will: ® Decrease O Increase O Stay the same
