Question: Sam's Cat Hotel operates weeks per year, days per week, and uses a continuous review inventory system. It purchases kitty litter for $ per bag.
Sam's Cat Hotel operates weeks per year, days per week, and uses a continuous review inventory system. It purchases kitty litter for $ per bag. The following information is available about these bags: Demand bags/week Order cost$/order Annual holding cost percent of cost Desired cycle-service level percent Lead time weeks ( working days) Standard deviation of weekly demand bags Current on-hand inventory is bags, with no open orders or backorders. a. Suppose that the weekly demand forecast of bags is incorrect and actual demand averages only bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $ nothing higher owing to the error in EOQ. (Enter your response rounded to two decimal places.)
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