Assignment:
Please answer B. and C. Which system requires more safety stock and by how much Look at the obtained results for the safety stock of each option and find the difference.
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Further, it uses a continuous review system for all SKUs classified as A ems. The demand for a specific SKU, cumently 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 cument characteristics are:
Demand (D 3,520 units year
Ordering cost (S) $115.00/order
Holding cost (H $3.50unit year
Lead time (L) 8 weeks Cycle-service level 99%
Demand is normally distributed, with a standard deviation of weekly demand of 66 units.
a. Calculate the item's EOQ. EOQ 943 units. (Enter your response rounded to the nearest whole number)
b. Use the EOQ to define the parameters of an appropriate continuous review and periodic review system for this item. Refer to the standard normaltable when necessary. Under a continuous review system, order 2513 units whenever the inventory level drops to 2080 units.