Question: The Toyota dealer from problem 3 is considering installing either a Q or a P system for inventory control. The standard deviation of demand has been 4 units per month, and the replenishment lead time is two months. A 95 percent service level is desired.
a. If a continuous review system is used, what is the value of Q and R that should be used?
b. If a periodic review system is used, what is the value of P and T that would be applicable?
c. What are the pros and cons of using the P system compared with using the Q system for this part?