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Firm uses a periodic review system for all SKUs classified

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Your firm uses a periodic review system for all SKUs classified, using ABC analysis, as B or C items. Further, it uses a continuous review system for all SKUs classified as A items. The demand for a specific SKU, currently classified as an A item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per year; the item's current characteristics are:

Demand (D) equals 13,000 units/year

Ordering cost (S) equals $120.00/order

Holding cost (H) equals $3.50/unit/year

Lead time (L) equals 8 weeks

Cycle-service level equals 97%

Demand is normally distributed, with a standard deviation of weekly demand of 79 units.

a. Calculate the item's EOQ. EOQ equals nothing units. (Enter your response rounded to the nearest whole number.)

Reference no: EM132204821

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