Answer these questions from a theoretical or practical perspective without the need for numbers

Write your comment on what might happen in each of the following cases, Use examples from your imagination if needed to prove your statement:

Your firm uses a periodic review system for all SKUs classified, using ABC analysis, as B or C items. Further, it uses a continuous review system for all SKUs classified as A items. The demand for a specific SKU, currently classified as an A item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per year; the item's current characteristics are:

Demand (D) = 15,080 units/year

Ordering cost (S) = $125.00/order

Holding cost (H) = $3.00/unit/year

Lead time (L) = 5 weeks

Cycle service level = 95 percent

Demand is normally distributed, with a standard deviation of weekly demand of 64 units.

a) What happens to the EOQ and the total cost when demand is doubled?

b) What happens to the EOQ and the total cost when unit price is doubled?

c) What is the annual cost of holding inventory at the EOQ and the annual cost of ordering inventory at the EOQ?

d) Comment on the sensitivity of the EOQ model to errors in demand or cost estimates.

e) How much does the total cost increase if the store manager orders twice as many units as the EOQ?

f) How much does the total cost increase if the store manager orders half as many units as the EOQ?

g) What is the EOQ and what is the lowest total cost?

h) What happens to the EOQ if the order cost goes lower?

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