14%) A company begins a review of ordering policies for a sampleof items. The company operates 52 weeks a year. The following arethe characteristics of one item: Demand = 3,380 units/year Orderingcost = $50/order Holding cost = $13/unit/year Lead time = 3 weeksStandard deviation of weekly demand = 16 units Desired cycleservice level = 98% a) Calculate EOQ and use it to find the orderinterval (OI). Round the number to the nearest integer week. Hint:D/Q will give you the # of orders to place in a year; orderinterval = review interval. b) Suppose the company just finished aperiodic review and found 20 units of on-hand inventory, how manyunits should be ordered (i.e. amount to order)?
