The local Toyota dealer from problem 2 is considering installing either a Qor P system for inventory control. The past standard deviation of demand has been 25 units per month, and the replenishment lead time is two months.

A 95 percent service level is desired a lf a continuous review system is used, what is the value of Q and R that should be used?

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b. If a periodic review system is used, what is the value of P and I that would be applicable?

c. What are the pros and cons of using the P system compared to using the Q system for this part?


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