Problem $20-36($Algo$)$

Palin's Muffler Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to

manage inventory of this standard muffler. Use the information in the following table to determine the optimal inventory target level $($or

order$-$up$-$to level$).$

Annual demand

Standard deviation of daily demand

Item cost

Annual holding cost

Review period

mufflers

mufflers per working day

per muffler

$\%$ of item value

working days

Ordering cost

Service probability

Lead time

Working days

$

$$55$ per order

$91\%$

$4$ working days

$285$ per year

a$.$ What is the optimal target level $($order$-$up$-$to level$)?($Use Excel's NORMSINV$()$ function to find the correct critical value for the

given $a-$level. Do not round intermediate calculations. Round $"z"$ value to $2$ decimal places and final answer to the nearest whole

number.$)$

Optimal target level

Optimal target level

b$.$ If the service probability requirement is $97$ percent, the optimal target level will:

Increase

Decrease

Stay the sameProblem $20-36($Algo$)$ Palin$$s Muffler Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to manage inventory of this standard muffler. Use the information in the following table to determine the optimal inventory target level $($or order$-$up$-$to level$).$