Your firm uses a continuous review system (Q system), in which the inventory position is updated after every transaction. The firm operates 52 weeks per year. One of the items has the following characteristics:
Demand = 14,560 units per year
Ordering cost = $40 per order
Holding cost = $6 per unit per year
Lead-time = 2 weeks
Standard deviation in weekly demand = 100 units
Cycle-service level = 80%
If Q is made equal to the EOQ, what are the desired values for Q and R?
◦ Q is between 439 and 443, and R is between 678 and 682.
◦ Q is between 65 and 69, and R is between 362 and 366.
◦ Q is between 65 and 69, and R is between 398 and 402.
◦ Q is between 439 and 443, and R is between 559 and 563.
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