Calculating the expected order quantity

Your firm uses a periodic review system for all SKUs​ classified, using ABC​ analysis, as B or C items.​ Further, it uses a continuous review system for all SKUs classified as A items. The demand for a specific​ SKU, currently classified as an A​ item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per​ year; the​ item’s current characteristics​ are:
Demand (D)= 13,000 units/year
Ordering cost (S)=​ $125.00​/order
Holding cost (H)=​ $4.00​/unit/year
Lead time (L)= 7 weeks
​Cycle-service level= 98​%
Demand is normally​ distributed, with a standard deviation of weekly demand of 67 units.
a. Calculate the​ item’s EOQ.
EOQ= —— units. ​(Enter your response rounded to the nearest whole​ number.)
b. Use the EOQ to define the parameters of an appropriate continuous review and periodic review system for this item. Refer to the standard normal table1 when necessary. Under a continuous review​ system, order ——- units whenever the inventory level drops to ——– units. ​(Enter your responses rounded to the nearest whole​ number.)
Under a periodic review​ system, order up to ——- units every ——– weeks. ​(Enter your responses rounded to the nearest whole​ number.)
c. Which system requires more safety stock and by how​ much? Select the correct choice below and fill in the answer box. The continuous/ periodic review system requires ——– more units of safety stock than the continuous/ periodic review system. ​
(Enter your response rounded to the nearest whole​ number.)

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