Peterson Enterprises Uses a Fixed Order Quantity Inventory Control System

question 31

Essay

Peterson Enterprises uses a fixed order quantity inventory control system.The firm operates 50 weeks per year and has the following characteristics for an item:
Demand = 50,000 units/year
Ordering cost = $35/order
Holding cost = $2/unit/year
Lead time = 3 weeks
Standard deviation in weekly demand = 125 units
a.What is the EOQ for this item?
b.If Peterson wishes to provide a 90 percent cycle-service level, what is the reorder point with safety stock?

---

Definitions:

Absence of Disease

A state in which an individual does not have any identifiable medical conditions or illnesses.

Interdisciplinary Team

A group of professionals from different disciplines working collaboratively to achieve a common goal or address a specific challenge.

Health Psychologists

Specialists who study how biological, psychological, and social factors affect health and illness, and work on promoting healthy living and illness prevention.

Solo Practitioners

Medical or health care providers who work independently, running their own practices rather than being part of a group or hospital staff.