Chapter 9, Problem 21P

A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item. $\begin{array}{l}\text{Demand }\left(D\right)=\text{64 units/week }\left(\text{Assume 52 weeks per year}\right)\\ \text{Ordering or setup cost }\left(S\right)=\$\text{5}0\text{/order}\\ \text{Holding cost }\left(H\right)=\$\text{13}/\text{unit/year}\\ \text{Lead time }\left(L\right)=\text{2 weeks}\\ \text{Standard deviation of}weekly\text{demand}=\text{1 2 units}\\ \text{Cycle}-\text{service level}=\text{88 percent}\end{array}$

1. What is the EOQ for this item?
2. What is the desired safety stock?
3. What is the reorder point?
4. What are the cost implications if the current policy for this item is $Q=200$ and $R=180$?