1 Working with the (Q, R) Model A local paint store uses a (Q, R) inventory system to control its stock levels. For a popular eggshell indoor paint, historical data shows the distribution of annual demand is approximately normal, with a mean of 468 cans and variance of 1872, expressed as A N (468, 1872). Replenishment lead time for this paint is about 14 weeks. Each can of paint costs the store $6. The fixed cost of replenishment is $45 per order and holding costs are based on a 20% annual interest rate. What is the associated Z-score at the optimal service level? O a. 1.01 O b. 1.37 O c. 2.78 O d. 2.03 What is the new reorder point under the optimal service level? O a. 189 cans O b. 149 cans O c. 172 cans O d. 157 cans Now, we are going to look at the optimal service level (instead of the 97-percent level from the above question). First, we need to determine the associated input costs. Given your answer to questions 1 and 2 along with the average A provided in the scenario, what is the per-can cost of a surplus C+? O a. $4.08 O b. $0.48 O c. $3.13 O d. $2.07 Suppose each can of paint sells for, on average, r= $28 (the average cost to the store per can is still c= $6). Using these two input values along with your answer to the above question, what is the optimal service level SL"? O a. 0.8435 O b. 0.9786 O c. 0.9141 O d. 0.8753