Company begins review of ordering policies

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Reference no: EM132306382

A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item:

Demand (D) = 72 units/week (Assume 48 weeks per year)

Ordering and setup cost (S) = $55 /order

Holding cost (H) = $18 /unit/year

Lead time (L) = 3 week(s)

Standard deviation of weekly demand = 18 units

Cycle-service level = 90 percent

EOQ = 145 units

Using the above information, develop the best policies for a periodic review system. Refer to the standard normal table for z-values.

a. What value of P gives the same approximate number of orders per year as the EOQ? nothing weeks. (Enter your response rounded to the nearest whole number.)

b. To provide a 90 percent cycle-service level, the average safety stock is nothing units. (Enter your response rounded to the nearest whole number.)

To provide a 90 percent cycle-service level, the target inventory level is nothing units. (Enter your response rounded to the nearest whole number.)

Reference no: EM132306382

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