Troy Enterprises Uses a Continuous Review Inventory Control System

question 114

Short Answer

Troy Enterprises uses a continuous review inventory control system. The firm operates 50 weeks per year, with an annual demand of 50,000 units, an ordering cost of $35 per order, a holding cost of $1 per unit per year, a lead time of 3 weeks, and a standard deviation of demand during lead time equal to 216.51 units.
(a) How many units should be ordered at a time (rounded to the nearest unit)?
(b) What is the reorder point if a 94% order-cycle service level is desired?

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Definitions:

Open Ocean

The vast, deep part of the sea that is not close to the coast or beyond the continental shelf.

Graded Bedding

A geological structure in which each layer of sediment is progressively heavier or finer, indicating deposition over time.

Water Current Velocity

The speed at which water flows in a specific direction in rivers, streams, or other bodies of water.

Sedimentary Sequence

A chronological order of sedimentary rocks laid down in layers, reflecting the history of sediment deposition over time.