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A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of items. Following are the characteristics of the item:
Demand (D) = 64 units/week (Assume 52 weeks per year.)
Ordering cost or set up cost (S) = $50/order
Holding cost (H)= $13/unit/year
Lead time (L) = 2 weeks
Standard deviation of weekly demand = 12 units Cycle-service level = 88%
a). What is the EOQ for this item?
b). What is the average time between orders (in weeks)?
c). What is the required safety stock?
d). What is the reorder point?
e) What are the annual carrying cost and annual ordering cost?
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