Enterprises uses continuous review inventory control system

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Reference no: EM132242532

Petromac Enterprises uses a continuous review inventory control system for one of its SKU's. The following information is available on the item .

The firm operates 50 weeks in a year.

Demand=50,000 units/year

Ordering cost=$35/order

Holding cost=$2/unit/year

Average lead time= 3 weeks

Standard deviation of weekly demand= 125 units

What is the economic order quantity for this item? Also, if Petromax wants to provide a 90% cycle-service level, what should be the safety stock and the reorder point?

Reference no: EM132242532

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