Question $4$: Inventory & Economic Order Quantity

a$)$ Distinguish between a Periodic Inventory review system and a Continuous

Inventory review system. $5$ marks.

b$)$ What are the benefits of ABC inventory control? $5$ marks.

c$)$ Explain the concept of an economic order quantity $($EOQ$)$ using a diagram

to help explain your answer. $5$ marks.

$4$

PTO.

d$)$ Given the EOQ formula EOQ $=2*$C$0*$D $/$ Ch where

$=$square root,

C$0=$ Cost of placing an order

Ch $=$ Cost of holding per statue

D $=$ Demand per year

What is the economic order quantity for Ornate Statues Ltd$.$ which has a weekly

demand of $200$ units for a particular statue? The company operates for $50$

weeks per annum. If ordering cost is $100$ per order placed and holding cost is

$1$ per item per annum, what is the economic order quantity? $5$ marks.

e$)$ How is the level of safety stock determined? $5$ marks.