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?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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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      

  1. 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
  2. If the service probability is 90%, the optimal target level will increase, decrease or stay the same?
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