Petromax Enterprises uses a continuous review inventory control system for one of its SKUs. The following information is available on the item. The firm operates 50 weeks in a year.
Demand= 50,000 units/year
Ordering cost= $35/order
Holding cost = $2/unit/year
Average lead time= 3 weeks
Standard deviation of weekly demand= 125 units
a. What is the economic order quantity for this item?
b. If Petromax wants to provide a 90 percent cycle-service level, what should be the safety stock and the reorder point?
Answers: 1
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Petromax Enterprises uses a continuous review inventory control system for one of its SKUs. The foll...
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