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 50 gallons of Yellow Paint every week for 52 weeks per year. Their current policy is that when they place an order for Yellow Paint from their supplier, they order 0 gallons at a price of $3.00 per gallon. The company does not hold Safety Stock it takes 1.75 weeks to receive an order from the supplier Administrative costs for Ordering paint ave been estimated to be $25 per order. Holding Costs 30% of the purchase price per gallon per year. What is the Total Annual Inventory Cost for the company's current policy? Service Level Value Reorder Point, ROP = L + SS 99.99% 3.719 d = Average Demand Rate per Time Period 99 90 3.000 D Demand Rate per Year 99.00% 2.326 L = Average Lead time (time periods) 95.00% 1.645 90.00% 1 282 SS - Safety Stock = 20 85.00% 1.036 80.00% 0.842 OLLO (Assuming Lead Time is constant as in Periodic review) 0 Standard Deviation of the demand 2 - Number of Standard deviations corresponding to a service level Q Order Quantity Average Inventory Level 0/2 +55 H = Holding Cost Per Year Per Unit $ Ordering/Setup Cost Per Order Total Annual Inventory Cost = ) H+ s + H(SS) Economic Order Quantity, EO Time Between V uuman Kale per rear 95.00% 1.645 L = Average Lead time (time periods) 90.00% 1.282 SS Safety Stock z al 85.00% 1.036 80.00% 0.842 OLLO (Assuming Lead Time is constant as in Periodic review) 0 - Standard Deviation of the demand z = Number of Standard deviations corresponding to a service level Q = Order Quantity Average Inventory Level 0/2 + SS H Holding Cost Per Year Per Unit Ordering/Setup Cost Per Order S Total Annual Inventory Cost = ) H+ s + H(SS) he Between Economic Order Quantity, Eod Orders = TBO - 500 ASBAR 50 582450 52106,00 0.5639.63 E. $175.90