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Jake, Inc. begins a review of ordering policies for its continuous review system by checking the...

Jake, Inc. begins a review of ordering policies for its continuous review system by checking the current policies for a sample of its A items. Following are the characteristics of one item:

Demand (D) = 94 units/week (assume 52 weeks per year)

Ordering and setup cost (S) = $720/order

Holding cost (H) = $23/unit/year

Lead time (L) = 3 weeks

Standard deviation of weekly demand = 30 units

Cycle-service level = 82 percent

Develop the best policies for a periodic-review system.

a.       What value of P gives the same approximate number of orders per year as the EOQ? Round to the nearest week.

b.       What safety stock and target inventory levels provide a 90-percent cycle-service level?

Math   Statistics-And-Probability   
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