Scenario 9.9
Demand = 5,200 units/year
Standard deviation of weekly demand = 11 units
Ordering costs = $45/order
Holding costs = $2/unit/year
Cycle-service level = 90% (z for 90% = 1.28)
Lead-time = 3 weeks
Number of weeks per year = 52 weeks
-Use the information in Scenario 9.9.The firm decided to change to the periodic review system to control the item's inventory.For the most recent review,an inventory clerk checked the inventory of this item and found 500 units.There were no scheduled receipts at the time.How many units should be ordered? (HINT: Use the EOQ model to derive P,the time between reviews. )
A)0 units
B)greater than 0 but less than or equal to 300 units
C)greater than 300 but less than or equal to 600 units
D)greater than 600 units

Question

Quizplus · Accepted Answer

The EOQ model helps determine the optimal order quantity and time between reviews (P). Using the given data, calculate EOQ and P, then determine the order quantity needed to meet the demand and maintain the desired cycle-service level. The result falls between 300 and 600 units.

Scenario 9.9 Demand = 5,200 Units/year