a. What is the EOQ

Sams optimal order quantity is ___ bags

The average time between orders is ___ weeks

b. What should R be?

The reorder point is ___ bags.

c. An inventory withdrawal of 10 bags was just made. Is it time to reorder?

It (is/ is not) time to reorder.

d. The store currently uses a lot size of 490 bags (i.e., Q=490). What is the annual holding cost of this policy?

The annual holding cost is ___

What is the annual ordering cost?

The annual ordering cost is ___

e. What would be the annual cost saved by shifting from the 490-bag lot size to the EOQ?

The annual holding cost with the EOQ is ___

The annual ordering cost with the EOQ is ___

Therefore, Sam's Cat Hotel sales ___ by shifting from the 490-bag lot size to the EOQ)

Points: 0.3 Sam's Cat Hotel operates 52 weeks per year, 5 days per week, and uses a continuous review inventory system. It purchases kitty litter for $12.00 per bag. The following information is available about these bags. Refer to the standard normal table for z-values. > Demand = 100 bags/week > Order cost = $55/order > Annual holding cost = 29 percent of cost > Desired cycle-service level = 90 percent > Lead time 1 week(s) (5 working days) > Standard deviation of weekly demand = 16 bags > Current on-hand inventory is 310 bags, with no open orders or backorders