The manager of a department store uses two types of inventory control systems to manage the inventory of stock keeping units (SKUs) in his store€”a continuous review system and a periodic review system. The manager must place replenishment orders for SKU-11 from the continuous review system and SKU 27 from the periodic review system. Although SKU-11 can be ordered any time, SKU- 27 can only be ordered every three weeks. The store operates 52 weeks a year, and the weekly demand rates for both SKUs are normally distributed. The following table provides pertinent information on both SKUs:

1. What is the reorder point for each SKU?

2. What is the EOQ for SKU-11?

3. If 80 units of SKU-27 are on hand, what should be the order quantity?

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SKU-11 SKU-27 Average weekly demand 65 units 100 8 units per week Standard deviation 5 units per week $20 Unit cost (in U.S. dollars) $40 Annual holding rate 35% 15% Ordering cost (in U.S. dollars) $100/order $50/order Lead time 3 weeks 2 weeks Desired service level 99% 97%