A local service station is open 7 days per week, 365 days per year. Sales of 10W40 grade premium oil average 20 cans per day. Inventory holding costs are $0.50 per can per year. Ordering costs are $10 per order. Lead time is two weeks. Backorders are not practical the motorist drives away.

a) Based on these data, calculate the economic order quantity and reorder point. Hint: Assume demand is deterministic. (Round your answers to the nearest whole number.) EOQ=? and Reorder point=?

b) The boss is concerned about this model because demand really varies. The standard deviation of demand was determined from a data sample to be 6.15 cans per day. The manager wants a 99.5 percent service probability. Determine a new inventory plan based on this information and the data in a. Use Q_opt from a. (Use Excel's NORMSINV() function to find the z value. Do not round intermediate calculations. Round z value to 2 decimal places and final answer to the nearest whole number.)