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) 14,040 units/year

Ordering cost (S) $130.00/order

Holding cost (H) $4.00/unit/year

Lead time (L) 6 weeks

Cycle-service level 98%