Petromax Enterprises uses a continuous review inventory control system for one of Its SKUs. The following information

Question:

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 for this item?
b. If Perromax wants to provide a 90 percent cycle- service level, what should be the safety stock and the reorder point?

Economic Order Quantity
Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. This production-scheduling model was developed in 1913 by Ford W. Harris and has...