Need help on answer to letter D at bottom:

========

A distributor is planning to calculate the optimal service level given the following information. Based on past data, sales response rate is 0.12% change in revenue for a 1% change in the service level (fill rate). Trading margin is $18 per item, inventory carrying cost is 24% per year, annual sales through the warehouse is 120,000 items. Cost of each item is $75, demand standard deviation is 300 items for a week, and the lead time is 4 weeks.

a. Calculate P

P = Trading Margin x Sales Response Rate x Annual Sales

=$18 x 0.12% x120,000

=$2,592

Therefore, Delta_P (P) is $2592

b. Calculate C

C = Annual Carrying cost x Standard Product Cost X Demand Standard Deviation x lead time x Z

= 24% x $75 x 300 x 4 x Z

= 21600Z

Therefore, Delta_C (C) is 21600Z

c. Calculate Z

Set P = C

Z = (P / C)

= 2592 / 21600

= 0.12

Therefore, Z is 0.12

d. Determine the optimal service level