the answer is not 3845 Petromax Enterprises uses a continuous review inventory c
ID: 369728 • Letter: T
Question
the answer is not 3845
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 52 weeks in a year. Refer to the standard normal table for z-values. Demand = 91,000 units/year Ordering cost = $32.50/order Holding cost = $2.50/unit/year Average lead time = 1 week Standard deviation of weekly demand = 200 units a. The economic order quantity for this item isunits. (Enter your response rounded to the nearest whole number.)Explanation / Answer
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Demand D = 91000
O = order cost = $32.5
C = Carrying cost = Inventory Holding cost = $2.5
Lead Time = L = 1 week
SD = Chi = 200 units
sqrt = square root
Economic Order Quantity (EOQ) = sqrt (2 D O / C)
EOQ = sqrt (2 * 91000 * 32.5 / 2.5)
= 1538.1807 units
EOQ = 1538 units
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