Question: 3 Working with the (Q, R) Model A local paint store uses a (Q, R) inventory system to control its stock levels. For a popular

3 Working with the (Q, R) Model A local paint

3 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 1 ~ 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. The store manager has provided you with the desired service level of 97 percent. What is the associated Z-score at this chosen service level? a. 0.97 b. 2.33 C. 3.49 d. 1.88 What is the reorder point under the target 97-percent service level? a. 169 cans b. 148 cans C. 205 cans d. 179 cans

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