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 $11.00 per bag. The following information is available about these bags. Refer to the standard normal table for z-values. ≻Demand = 95 bags/week ≻Order cost = $57/order ≻Annual holding cost = 30 percent of cost ≻Desired cycle-service level=98 percent ≻Lead time = 1 week(s) (5 working days) ≻Standard deviation of weekly demand = 20 bags ≻Current on-hand inventory is 350 bags, with no open orders or backorders. d. The store currently uses a lot size of 490 bags (i.e., Q=490). What is the annual holding cost of this policy? (Enter your response rounded to two decimal places.) and (Enter your response rounded to two decimal places.) **select the correct multiple choice answer** e. What would be the annual cost saved by shifting from the 490-bag lot size to the EOQ? (Enter your responses rounded to two decimal places.)
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 $11.00 per bag. The following information is available about these bags. Refer to the standard normal table for z-values. ≻Demand = 95 bags/week ≻Order cost = $57/order ≻Annual holding cost = 30 percent of cost ≻Desired cycle-service level=98 percent ≻Lead time = 1 week(s) (5 working days) ≻Standard deviation of weekly demand = 20 bags ≻Current on-hand inventory is 350 bags, with no open orders or backorders. d. The store currently uses a lot size of 490 bags (i.e., Q=490). What is the annual holding cost of this policy? (Enter your response rounded to two decimal places.) and (Enter your response rounded to two decimal places.) **select the correct multiple choice answer** e. What would be the annual cost saved by shifting from the 490-bag lot size to the EOQ? (Enter your responses rounded to two decimal places.)
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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7. 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 $11.00 per bag. The following information is available about these bags. Refer to the standard normal table for z-values.
≻Demand = 95 bags/week
≻Order cost = $57/order
≻Annual holding cost = 30 percent of cost
≻Desired cycle-service level=98 percent
≻Lead time = 1 week(s) (5 working days)
≻Standard deviation of weekly demand = 20 bags
≻Current on-hand inventory is 350 bags, with no open orders or backorders.
d. The store currently uses a lot size of 490 bags (i.e., Q=490). What is the annual holding cost of this policy? (Enter your response rounded to two decimal places.) and (Enter your response rounded to two decimal places.) **select the correct multiple choice answer**
e. What would be the annual cost saved by shifting from the 490-bag lot size to the EOQ?
(Enter your responses rounded to two decimal places.)
Transcribed Image Text:perates 52 weeks per year, 5 days per week, and uses a continuous review inventory system. It purchases kitty litter for $11.00
on is available about these bags. Refer to the standard normal table for z-values.
95 bags/week
= $57/order
- X
Data Table
The table below shows the total area under the normal curve for a point that is Z standard deviations to the
right of the mean.
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
0.5000 0.5040 0.5080 0.5120 0.5160 0.5199 0.5239 0.5279 0.5319 0.5359
0.5398 0.54380.5478 0.5517 0.5557 0.5596 0.5636 0.5675 0.57140.5754
0.2
0.0
0.1
0.5793 0.5832 0.5871 0.5910 0.5948 0.5987 0.6026 0.6064 0.6103 0.6141
0.6179 0.6217 0.6255 0.6293 0.6331 0.6368 0.6406 0.6443 0.6480 0.6517
0.6554 0.6591 0.6628 0.6664 0.6700 0.6736 0.6772 0.6808 | 0.6844 | 0.6879
0.6915 0.6950 0.6985 0.7019 0.7054 0.7088 0.71230.7157 0.7190 |0.7224
0.7258 0.7291 0.7324 0.7357 0.7389 0.7422 0.74540.7486 0.7518 0.7549
0.7580 0.7612 0.7642 0.7673 0.77040.7734 0.7764 0.7794 | 0.7823 0.7852
0.8
0.3
0.4
0.5
0.6
0.7
0.7881 0.7910 0.7939 0.7967 0.7996 0.8023 0.8051 0.8079 0.8106 0.8133
0.9
0.8159 0.8186 0.8212 0.8238 0.8264 0.8289 0.8315 0.8340 0.8365 0.8389
1.0
0.8413 0.8438 0.8461 0.8485 0.8508 0.8531 0.8554 0.8577 0.8599 0.8621
0.8643 0.8665 0.8686 0.8708 0.8729 0.8749 0.8770 0.8790 0.8810 0.8830
re
1.1
1.2
in
0.8849 0.8869 0.8888 0.8907 0.8925 | 0.8944 0.8962 0.8980 | 0.8997 0.9015
1.3
0.9032 0.9049 0.9066 0.9082 0.90990.9115 0.9131 0.9147 0.9162 0.9177
1.4
0.9192 0.9207 0.9222 0.9236 0.9251 |0.9265 0.9279 0.9292 |0.9306 0.9319
0.9332 0.9345 0.9357 0.9370 0.9382 0.9394 0.9406 0.9418 0.9430 0.9441
0.9452 0.9463 0.9474 0.9485 0.9495 0.9505 0.9515 0.9525 0.9535 0.9545
0.9554 0.9564 0.9573 | 0.9582 0.9591 0.9599 0.9608 0.9616 0.9625 0.9633
0.9641 0.9649 0.9656 0.9664 0.96710.9678 0.9686 0.9693 0.9700 0.9706
0.9713 0.9719 0.9726 0.9732 0.9738 0.9744 0.9750 0.9756 0.9762 0.9767
Ja
1.5
eri
1.6
1.7
in
1.8
1.9
n
2.0
0.9773 0.9778 0.9783 0.9788 0.9793 0.9798 0.9803 0.9808 0.9812 0.9817
2.1
0.9821 0.9826 0.9830 0.9834 0.9838 | 0.9842 0.9846 0.9850 0.9854 0.9857
0.9861 0.9865 0.9868 0.9871 |0.9875 0.9878 0.9881 0.9884 0.9887 0.9890
2.3
2.2
0.9893 0.9896 0.9898 0.9901 0.9904 | 0.9906 0.9909 0.9911 0.9913 0.9916
an
2.4
0.9918 0.9920 0.9922 0.9925 0.9927 0.9929 0.9931 0.9932 0.9934 0.9936
2.5
0.9938 0.9940 0.9941 0.9943 0.9945 0.9946 0.9948 0.9949 0.9951 0.9952
0.9953 0.9955 0.9956 0.9957 0.9959 0.9960 0.9961 0.9962 0.9963 0.9964
0.9965 0.9966 0.9967 0.9968 0.9969 0.9970 0.99710.9972 0.9973 0.9974
0.9974 0.9975 0.9976 0.9977 0.9977 0.9978 0.99790.9980 0.9980 0.9981
be
2.6
2.7
din
2.8
2.9
0.9981 0.9982 0.9983 0.9983 0.9984 0.9984 0.99850.9985 0.9986 0.9986
3.0
eri
0.9987 0.9987 0.9987 0.9988 0.9988 0.9989 0.9989 0.9989 0.9990 0.9990
3.1
0.9990 0.9991 0.9991 0.9991 0.9992 0.9992 0.99920.9992 0.9993 0.9993
0.9993 0.9993 0.9994 0.9994 0.9994 0.9994 0.99940.9995 0.9995 0.9995
3.3
n's
3.2
0.9995 0.9995 0.9995 0.9995 0.9996 0.9996 0.9996 0.9996 0.9996 0.9997
Print
Done
Transcribed Image Text: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 $11.00 per bag. The
following information is available about these bags. Refer to the standard normal table for z-values.
>Demand = 95 bags/week
> Order cost = $57/order
>Annual holding cost = 30 percent of cost
> Desired cycle-service level = 98 percent
>Lead time = 1 week(s) (5 working days)
>Standard deviation of weekly demand = 20 bags
> Current on-hand inventory is 350 bags, with no open orders or backorders.
a. What is the EOQ?
Sam's optimal order quantity is
MON
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
V 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?
uring the
The annual holding cost is $ (Enter your response rounded to two decimal places.)
e assignm
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?
le Choice
O A. There is not enough information to determine this.
O B. When Q = 490, the annual holding cost is larger than the ordering cost, therefore Q is too large.
O C. When Q = 490, the annual holding cost is less then the ordering cost, therefore Q is too small.
rical Prol
O D. Both quantities are appropriate.
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 $ (Enter your response rounded to two decimal places.)
The annual ordering cost with the EOQ is S (Enter your response rounded to two decimal places,)
Krajewski,
Therefore, Sam's Cat Hotel saves S by shifting from the 490-bag lot size to the EOQ. (Enter your response rounded to two decimal places.)
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