It is your responsibility, as the new head of the automotive section of Nichols
Department Store, to ensure that reorder quantities for the various items have been
correctly established. You decide to test one item and choose Michelin tires, XW size 185x 14 BSW. A continuous review inventory system has been used, so you examine this as
well as other records and come up with the following data:
Cost per tire =$35 each
Holding cost = 20% of tire cost per year
Ordering cost =$20 per order
Demand =1,000 per year
Standard Deviation of daily demand = 3 tires
Delivery Lead time = 4 days
Because customers generally do not wait for tires but go elsewhere, you decided on a service probability of 98%. Assume the demand occurs 365 days per year.

Suppose that management (unilaterally) decides to reorder the EOQ quantity (solution derived above) when inventory levels hit 20 tires. Will the store's service level suffer? If so,by how much?