Question: PetSmart operates 48 weeks per year and uses a continuous review inventory system. It purchases dry dog food for $16 per bag. The following information
PetSmart operates 48 weeks per year and uses a continuous review inventory system. It purchases dry dog food for $16 per bag. The following information is available about these bags. Refer to the standard normal table at bottom of this page.
Average demand = 94 bags/week
Order cost = $40/order
Annual holding cost = 25 percent of the unit cost
Desired cycle-service level=89.97 percent
Lead time = 1 week constant
Standard deviation of weekly demand = 16 bags
Current on-hand inventory is 300 bags, with no open orders or backorders.
What is the amount of safety stock required to meet the desired service level? ____ bags (Enter your response rounded to the nearest whole number.)
What should be the reorder point (ROP)? ____ bags (Enter your response rounded to the nearest whole number.)
What is the EOQ? (Enter your response rounded to the nearest whole number.)
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