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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 5252 weeks per year; the item's current characteristics? are:

Demand (D)=14,560 units/year

Ordering cost (S)=$135.00/order

Holding cost (H)=$2.50/unit/year

Lead time (L)=6 weeks ?

Cycle-service levelequals=99%

Demand is normally distributed, with a standard deviation of weekly demand of 80 units.

a. Calculate the item's EOQ.

EOQ= ______units. ?(Enter your response rounded to the nearest whole number.)

Reference no: EM131473388

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