QUESTION 18 Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 64 gallons of Green Paint every week (for 52 weeks per year). They purchase Green Paint from their supplier at a price of $3.50 per gallon. The company does not hold Safety Stock] it takes 2.25 weeks to receive an order from the supplier. Administrative costs for Ordering paint have been estimated to be $30 per order. Holding Costs - 35% of the purchase price per gallon per year. At what inventory level should the company place an order? 1.605 Reorder Point, ROP = L + SS Service Level z Value 99.99% 3.719 de Average Demand Rate per Time Period 99 90 3.000 D Demand Rate per Year 99.00 2.326 Average Lead time (time periods) 95.00% SS Safety Stock = 20 90.00% 1.282 SOON 1036 80.00% 0842 OLLO (Assuming Lead Time is constant as in Periodic review) Standard Deviation of the demand 2 Number of Standard deviations corresponding to a service level Q Order Quantity Average Inventory Level 0/2 H Holding Cost Per Year Per Unit SOrdering/Setup Cost Per Order Total Annual Inventory Cost = ) H+ + H(SS)