3 points Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of ther 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 74 gallons of Purple Paint every week for 52 weeks per year, Standard Devletion of the Demand gallons). They purchase Purple Paint from their supplier at a price of $4.00 per gallon It takes 2.50 weeks to receive an order from the supplier. Administrative costs for Ordering paint have been estimated to be $35 per order Holding Costs 40% of the purchase price per gallon per year. How much Safety Stock should the company hold to have a service Levet of 98.04? Lot Reorder Point, ROP = dL + SS Service Level Value 99.99% 3.719 d = Average Demand Rate per Time Period 99.90% 3.090 D-Demand Rate per Year 99.00% 2.326 L = Average Lead time (time periods) 95.00% 1.645 90.00% SS = Safety Stock - zadu 1.282 85.00 1.036 80.00% 0.842 Da (Assuming Lead Time is constant as in Periodic review) Standard Deviation of the demand z = Number of Standard deviations corresponding to a service level Q-Order Quantity Average Inventory Level 0/2 + SS H-Holding Cost Per Year Per Unit 5 Ordering/Setup Cost Per Order + S + Total Annual Inventory Cost = (9) + s + H(SS) 2DS H Time Between Economic Order Quantity, EOQ = Eog Orders = TBO = D A 395 gallons of paint