Sam\'s Cat Hotel operates 52 weeks per year, 55 days per week, and uses a contin

Q: Sam's Cat Hotel operates 52 weeks per year, 55 days per week, and uses a contin

A Annual demand (D) = 92*52 bags Holding cost per unit per year (H) = 28%*11.25 = $3.15 Ordering cost (O) = $56 EOQ = (2*D*O/H)^.5 EOQ = (2*92*52*56/3.15)^.5 EOQ = 412.43 or 412 bags Hence, the EOQ is 412 bags.

ID: 358842 • Letter: S

Question

Sam's Cat Hotel operates 52 weeks per year, 55 days per week, and uses a continuous review inventory system. It purchases kitty litter for $11.25

per bag. The following information is available about these bags.

Demand=92 bags/week

Order cost =$56/order

Annual holding cost =28 percent of cost

Desired cycle-service level =90 percent

Lead time =2week(s) (10working days)

Standard deviation of weekly demand =10 bags

Current on-hand inventory is 325 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.)

Explanation / Answer

Annual demand (D) = 92*52 bags

Holding cost per unit per year (H) = 28%*11.25 = $3.15

Ordering cost (O) = $56

EOQ = (2*D*O/H)^.5

EOQ = (2*92*52*56/3.15)^.5

EOQ = 412.43 or 412 bags

Hence, the EOQ is 412 bags.

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Sam\'s Cat Hotel operates 52 weeks per year, 55 days per week, and uses a contin

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