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
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 48 weeks in a year. Refer to the standard normal table LOADING... for z-values.
Demand = 78,000 units/year
Ordering cost = $32.50/order
Holding cost = $4.00/unit/year
Average lead time = 4 weeks
Standard deviation of weekly demand = 250 units
a. The economic order quantity for this item is _ units. (Enter your response rounded to the nearest whole number.)
b. If Petromax wants to provide a 92% service level, the safety stock is _ units (enter your response rounded to the nearest whole number) and the reorder point is _ units (enter your response rounded to the nearest whole number).
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