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 74 gallons of Purple Paint every week (for 52 weeks per year). They purchase Purple Paint from their supplier at a price of 54.00 per gallon. [The company does not hold Safety Stock] it takes 2.50 weeks to receive an order from the supplier. Administrative costs for Ordering paint have been estimated to be 535 per order. Holding Costs = 40% of the purchase price per gallon per year. At what inventory level should the company place an order? Reorder Point, ROP = dL + SS d = Average Demand Rate per Time Period D = Demand Rate per Year L = Average Lead time (time periods) SS = Safety Stock = Z OL Service Level 99.99% 99.90% 99.00% 95.00% 90.00% 85.00% 80.00% z Value 3.719 3.090 2.326 1.645 1.282 1.036 0.842 (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 = Q/2 + SS H = Holding Cost Per Year Per Unit S = Ordering/Setup Cost Per Order Total Annual Inventory Cost = (%) + @)s+H(SS) Time Between 2DS Economic Order Quantity, EOQ = EOQ Orders = TBO = D O A 185 gallons of paint OB. 57 gallons of paint oc 4810 gallons of paint OD. 9620 gallons of paint OE 37 gallons of paint