Question: 1. Continuous Review System (Q-System) or Reorder Pint System (ROP) or Fixed Order Quantity (FOQ) (10 Points) A company begins a review of ordering policies

1. Continuous Review System (Q-System) or Reorder Pint System (ROP) or Fixed Order Quantity (FOQ) (10 Points)

A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item.

Annual Demand (D) = 64 units/week (Assume 52 weeks per year) Ordering and setup cost (S) = $50/order Holding cost (H)= $13/ unit/year Lead time (L) = 2 weeks Standard deviation of weekly demand (Sigma t) = 12 units Cycle-service level = 88 percent

What is the EOQ for this item?

What is the average demand during lead time (Xbar L)?

What is the desired safety stock (SS)?

What is the reorder point (R)?

What is the ordering cost at the lot size of EOQ?

What is the holding cost at the lot size of EOQ?

What the safety stock cost?

What is the total cost?

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