16. Petromax Enterprises uses a continuous review inventory control system for one of its SKUs. The...

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16. 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? 17. In a continuous review inventory system, the lead time for door knobs is 5 weeks. The standard deviation of demand during the lead time is 85 units. The desired cycle-service level is 99 percent. The supplier of door knobs streamlined its operations and now quotes a one-week lead time. How much can safety stock be reduced without reducing the 99 percent cycle-service level? 26. Nationwide Auto Parts uses a periodic review inventory control system for one of its stock items. The review interval is 6 weeks, and the lead time for receiving the materials ordered from its wholesaler is 3 weeks. Weekly demand is normally distributed, with a mean of 100 units and a standard deviation of 20 units. a. What is the average and the standard deviation of demand during the protection interval? b. What should be the target inventory level if the firm desires 97.5 percent stockout protection? c. If 350 units were in stock at the time of a periodic review, how many units should be ordered? 27. In a P system, the lead time for a box of weed-killer is 2 weeks and the review period is 1 week. Demand during the protection interval averages 218 boxes, with a standard deviation of 40 boxes. a. What is the cycle-service level when the target inventory is set at 300 boxes? b. In the fall season, demand for weed-killer decreases but also becomes more highly variable. Assume that during the fall season, demand during the protection interval is expected to decrease to 180 boxes, but with a standard deviation of 50 boxes. What would be the cycle-service level if management keeps the target inventory level set at 300 boxes? 16. 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? 17. In a continuous review inventory system, the lead time for door knobs is 5 weeks. The standard deviation of demand during the lead time is 85 units. The desired cycle-service level is 99 percent. The supplier of door knobs streamlined its operations and now quotes a one-week lead time. How much can safety stock be reduced without reducing the 99 percent cycle-service level? 26. Nationwide Auto Parts uses a periodic review inventory control system for one of its stock items. The review interval is 6 weeks, and the lead time for receiving the materials ordered from its wholesaler is 3 weeks. Weekly demand is normally distributed, with a mean of 100 units and a standard deviation of 20 units. a. What is the average and the standard deviation of demand during the protection interval? b. What should be the target inventory level if the firm desires 97.5 percent stockout protection? c. If 350 units were in stock at the time of a periodic review, how many units should be ordered? 27. In a P system, the lead time for a box of weed-killer is 2 weeks and the review period is 1 week. Demand during the protection interval averages 218 boxes, with a standard deviation of 40 boxes. a. What is the cycle-service level when the target inventory is set at 300 boxes? b. In the fall season, demand for weed-killer decreases but also becomes more highly variable. Assume that during the fall season, demand during the protection interval is expected to decrease to 180 boxes, but with a standard deviation of 50 boxes. What would be the cycle-service level if management keeps the target inventory level set at 300 boxes?