(Answered) Petromax enterprises uses a continous review inventory

Management Studies

Petromax Enterprises uses a continous review inventory control system of one of its SKU's. The following information is available on the item. The firm operates 50 weeks in a year.

Demand = 50,000 units/year

Ordering cost = $35/order

Holding costs = $2/unit/year

Average lead time = 3 weeks

Standard deviation of weekly demand = 125 units

a. What is the economic order quantity for this item?

b. If Petromax wants to provide a 95 percent cycle-service level, what should be the safety stock and the reorder point?

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Business Management, Management Studies

Category:- Business Management
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