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Your firm uses a periodic review (P) system and operated 52 weeks per year. One of the items has following characteristics: Demand = 20,000 units/year Ordering cost = $40/order Holding cost = $2/unit/year Lead Time = 2 weeks Cycle Service Level = 95%
• Calculate the P that gives approximately the same number of orders per year as the EOQ. Round down your answer to the nearest week.
• Find the SS and T corresponding to the 95% service level.
• Compare SS for the Q and the P system. Which one has a bigger SS. Explain why.
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