Question: PLEASE ANSWER ALL QUESTIONS Sam's Cat Hotel operates 52 weeks per year, 7 days per week, and uses a continuous review inventory system. It purchases

PLEASE ANSWER ALL QUESTIONS

Sam's Cat Hotel operates 52 weeks per year, 7 days per week, and uses a continuous review inventory system. It purchases kitty litter for $11.00 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 = $57/order

Annual holding cost = 29 percent of cost

Desired cycle-service level=90 percent

Lead time = 4 week(s) (28 working days)

Standard deviation of weekly demand = 13 bags

Current on-hand inventory is 310 bags, with no open orders or backorders.

a. What is the EOQ?

Sam's optimal order quantity is ________ bags. (Enter your response rounded to the nearest whole number.)

What would be the average time between orders (in weeks)?

The average time between orders is _________ weeks. (Enter your response rounded to one decimal place.)

b. What should R be?

The reorder point is ________ bags. (Enter your response rounded to the nearest whole number.)

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

It ___________ time to reorder.

d. The store currently uses a lot size of 505 bags (i.e., Q=505).

What is the annual holding cost of this policy?

The annual holding cost is $________ (Enter your response rounded to two decimal places.)

What is the annual ordering cost?

The annual ordering cost is $_________(Enter your response rounded to two decimal places.)

Without calculating the EOQ, how can you conclude from these two calculations that the current lot size is too large? Choose the correct answer below:

A. When Q= 505, the annual holding cost is larger than the ordering cost, therefore Q is too large.

B. Both quantities are appropriate.

C. There is not enough information to determine this.

D. When Q = 505, the annual holding cost is less then the ordering cost, therefore Q is too small.

e. What would be the annual cost saved by shifting from the 505-bag lot size to the EOQ?

The annual holding cost with the EOQ is $_______ (Enter your response rounded to two decimal places.)

The annual ordering cost with the EOQ is $________(Enter your response rounded to two decimal places.)

Therefore, Sam's Cat Hotel saves $________ by shifting from the 505-bag lot size to the EOQ. (Enter your response rounded to two decimal places.)

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