Sam's Cat Hotel operates 52weeks per year, 5 days per week, and uses a continuous review inventory system. It purchases kitty litter for $10.50 per bag. The following information is available about these bags. Refer to the standard normal table AT END for z-values. ≻Demand= 92 bags/week ≻Order cost =$58/order ≻Annual holding cost =26 percent of cost ≻Desired cycle-service level=99 percent ≻Lead time = 1 week(s) (5 working days) ≻Standard deviation of weekly demand = 20 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 1. is not 2. is 3. time to reorder. d. The store currently uses a lot size of 495 bags (i.e., Q=495). 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? A. When Q = 495, the annual holding cost is larger than the ordering cost, therefore Q is too large. B. Both quantities are appropriate. C. When Q = 495, the annual holding cost is less then the ordering cost, therefore Q is too small. D. There is not enough information to determine this. e. What would be the annual cost saved by shifting from the 495-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 495-bag lot size to the EOQ. (Enter your response rounded to two decimal places.) -- 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. Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.0 0.5000 0.5040 0.5080 0.5120 0.5160 0.5199 0.5239 0.5279 0.5319 0.5359 0.1 0.5398 0.5438 0.5478 0.5517 0.5557 0.5596 0.5636 0.5675 0.5714 0.5754 0.2 0.5793 0.5832 0.5871 0.5910 0.5948 0.5987 0.6026 0.6064 0.6103 0.6141 0.3 0.6179 0.6217 0.6255 0.6293 0.6331 0.6368 0.6406 0.6443 0.6480 0.6517 0.4 0.6554 0.6591 0.6628 0.6664 0.6700 0.6736 0.6772 0.6808 0.6844 0.6879 0.5 0.6915 0.6950 0.6985 0.7019 0.7054 0.7088 0.7123 0.7157 0.7190 0.7224 0.6 0.7258 0.7291 0.7324 0.7357 0.7389 0.7422 0.7454 0.7486 0.7518 0.7549 0.7 0.7580 0.7612 0.7642 0.7673 0.7704 0.7734 0.7764 0.7794 0.7823 0.7852 0.8 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 1.1 0.8643 0.8665 0.8686 0.8708 0.8729 0.8749 0.8770 0.8790 0.8810 0.8830 1.2 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 0.9099 0.9115 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 1.5 0.9332 0.9345 0.9357 0.9370 0.9382 0.9394 0.9406 0.9418 0.9430 0.9441 1.6 0.9452 0.9463 0.9474 0.9485 0.9495 0.9505 0.9515 0.9525 0.9535 0.9545 1.7 0.9554 0.9564 0.9573 0.9582 0.9591 0.9599 0.9608 0.9616 0.9625 0.9633 1.8 0.9641 0.9649 0.9656 0.9664 0.9671 0.9678 0.9686 0.9693 0.9700 0.9706 1.9 0.9713 0.9719 0.9726 0.9732 0.9738 0.9744 0.9750 0.9756 0.9762 0.9767 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 2.2 0.9861 0.9865 0.9868 0.9871 0.9875 0.9878 0.9881 0.9884 0.9887 0.9890 2.3 0.9893 0.9896 0.9898 0.9901 0.9904 0.9906 0.9909 0.9911 0.9913 0.9916 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 2.6 0.9953 0.9955 0.9956 0.9957 0.9959 0.9960 0.9961 0.9962 0.9963 0.9964 2.7 0.9965 0.9966 0.9967 0.9968 0.9969 0.9970 0.9971 0.9972 0.9973 0.9974 2.8 0.9974 0.9975 0.9976 0.9977 0.9977 0.9978 0.9979 0.9980 0.9980 0.9981 2.9 0.9981 0.9982 0.9983 0.9983 0.9984 0.9984 0.9985 0.9985 0.9986 0.9986 3.0 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 0.9992 0.9992 0.9993 0.9993 3.2 0.9993 0.9993 0.9994 0.9994 0.9994 0.9994 0.9994 0.9995 0.9995 0.9995 3.3 0.9995 0.9995 0.9995 0.9995 0.9996 0.9996 0.9996 0.9996 0.9996 0.9997
Sam's Cat Hotel operates 52weeks per year, 5 days per week, and uses a continuous review inventory system. It purchases kitty litter for $10.50 per bag. The following information is available about these bags. Refer to the standard normal table AT END for z-values. ≻Demand= 92 bags/week ≻Order cost =$58/order ≻Annual holding cost =26 percent of cost ≻Desired cycle-service level=99 percent ≻Lead time = 1 week(s) (5 working days) ≻Standard deviation of weekly demand = 20 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 1. is not 2. is 3. time to reorder. d. The store currently uses a lot size of 495 bags (i.e., Q=495). 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? A. When Q = 495, the annual holding cost is larger than the ordering cost, therefore Q is too large. B. Both quantities are appropriate. C. When Q = 495, the annual holding cost is less then the ordering cost, therefore Q is too small. D. There is not enough information to determine this. e. What would be the annual cost saved by shifting from the 495-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 495-bag lot size to the EOQ. (Enter your response rounded to two decimal places.) -- 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. Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.0 0.5000 0.5040 0.5080 0.5120 0.5160 0.5199 0.5239 0.5279 0.5319 0.5359 0.1 0.5398 0.5438 0.5478 0.5517 0.5557 0.5596 0.5636 0.5675 0.5714 0.5754 0.2 0.5793 0.5832 0.5871 0.5910 0.5948 0.5987 0.6026 0.6064 0.6103 0.6141 0.3 0.6179 0.6217 0.6255 0.6293 0.6331 0.6368 0.6406 0.6443 0.6480 0.6517 0.4 0.6554 0.6591 0.6628 0.6664 0.6700 0.6736 0.6772 0.6808 0.6844 0.6879 0.5 0.6915 0.6950 0.6985 0.7019 0.7054 0.7088 0.7123 0.7157 0.7190 0.7224 0.6 0.7258 0.7291 0.7324 0.7357 0.7389 0.7422 0.7454 0.7486 0.7518 0.7549 0.7 0.7580 0.7612 0.7642 0.7673 0.7704 0.7734 0.7764 0.7794 0.7823 0.7852 0.8 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 1.1 0.8643 0.8665 0.8686 0.8708 0.8729 0.8749 0.8770 0.8790 0.8810 0.8830 1.2 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 0.9099 0.9115 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 1.5 0.9332 0.9345 0.9357 0.9370 0.9382 0.9394 0.9406 0.9418 0.9430 0.9441 1.6 0.9452 0.9463 0.9474 0.9485 0.9495 0.9505 0.9515 0.9525 0.9535 0.9545 1.7 0.9554 0.9564 0.9573 0.9582 0.9591 0.9599 0.9608 0.9616 0.9625 0.9633 1.8 0.9641 0.9649 0.9656 0.9664 0.9671 0.9678 0.9686 0.9693 0.9700 0.9706 1.9 0.9713 0.9719 0.9726 0.9732 0.9738 0.9744 0.9750 0.9756 0.9762 0.9767 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 2.2 0.9861 0.9865 0.9868 0.9871 0.9875 0.9878 0.9881 0.9884 0.9887 0.9890 2.3 0.9893 0.9896 0.9898 0.9901 0.9904 0.9906 0.9909 0.9911 0.9913 0.9916 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 2.6 0.9953 0.9955 0.9956 0.9957 0.9959 0.9960 0.9961 0.9962 0.9963 0.9964 2.7 0.9965 0.9966 0.9967 0.9968 0.9969 0.9970 0.9971 0.9972 0.9973 0.9974 2.8 0.9974 0.9975 0.9976 0.9977 0.9977 0.9978 0.9979 0.9980 0.9980 0.9981 2.9 0.9981 0.9982 0.9983 0.9983 0.9984 0.9984 0.9985 0.9985 0.9986 0.9986 3.0 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 0.9992 0.9992 0.9993 0.9993 3.2 0.9993 0.9993 0.9994 0.9994 0.9994 0.9994 0.9994 0.9995 0.9995 0.9995 3.3 0.9995 0.9995 0.9995 0.9995 0.9996 0.9996 0.9996 0.9996 0.9996 0.9997
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...
Related questions
Concept explainers
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Topic Video
Question
question 3
Sam's Cat Hotel operates 52weeks per year, 5 days per week, and uses a continuous review inventory system. It purchases kitty litter for
$10.50 per bag. The following information is available about these bags.
Refer to the standard normal table AT END for z-values.
≻Demand= 92 bags/week
≻Order cost =$58/order
≻Annual holding cost =26 percent of cost
≻Desired cycle-service level=99 percent
≻Lead time = 1 week(s) (5 working days)
≻Standard deviation of weekly demand = 20 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
3. time to reorder.
1. is not
2. is
d. The store currently uses a lot size of 495 bags (i.e., Q=495).
What is the annual holding cost of this policy?
What is the annual holding cost of this policy?
The annual holding cost is $____________.
(Enter your response rounded to two decimal places.)
(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.)
(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?
A. When Q = 495, the annual holding cost is larger than the ordering cost, therefore Q is too large.
B. Both quantities are appropriate.
C. When Q = 495, the annual holding cost is less then the ordering cost, therefore Q is too small.
D. There is not enough information to determine this.
e. What would be the annual cost saved by shifting from the 495-bag lot size to the EOQ?
The annual holding cost with the EOQ is $_________.
(Enter your response rounded to two decimal places.)
(Enter your response rounded to two decimal places.)
The annual ordering cost with the EOQ is $_________.
(Enter your response rounded to two decimal places.)
(Enter your response rounded to two decimal places.)
Therefore, Sam's Cat Hotel saves $________ by shifting from the
495-bag lot size to the EOQ. (Enter your response rounded to two decimal places.)
--
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.
|
Z
|
0.00
|
0.01
|
0.02
|
0.03
|
0.04
|
0.05
|
0.06
|
0.07
|
0.08
|
0.09
|
|
0.0
|
0.5000
|
0.5040
|
0.5080
|
0.5120
|
0.5160
|
0.5199
|
0.5239
|
0.5279
|
0.5319
|
0.5359
|
|
0.1
|
0.5398
|
0.5438
|
0.5478
|
0.5517
|
0.5557
|
0.5596
|
0.5636
|
0.5675
|
0.5714
|
0.5754
|
|
0.2
|
0.5793
|
0.5832
|
0.5871
|
0.5910
|
0.5948
|
0.5987
|
0.6026
|
0.6064
|
0.6103
|
0.6141
|
|
0.3
|
0.6179
|
0.6217
|
0.6255
|
0.6293
|
0.6331
|
0.6368
|
0.6406
|
0.6443
|
0.6480
|
0.6517
|
|
0.4
|
0.6554
|
0.6591
|
0.6628
|
0.6664
|
0.6700
|
0.6736
|
0.6772
|
0.6808
|
0.6844
|
0.6879
|
|
0.5
|
0.6915
|
0.6950
|
0.6985
|
0.7019
|
0.7054
|
0.7088
|
0.7123
|
0.7157
|
0.7190
|
0.7224
|
|
0.6
|
0.7258
|
0.7291
|
0.7324
|
0.7357
|
0.7389
|
0.7422
|
0.7454
|
0.7486
|
0.7518
|
0.7549
|
|
0.7
|
0.7580
|
0.7612
|
0.7642
|
0.7673
|
0.7704
|
0.7734
|
0.7764
|
0.7794
|
0.7823
|
0.7852
|
|
0.8
|
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
|
|
1.1
|
0.8643
|
0.8665
|
0.8686
|
0.8708
|
0.8729
|
0.8749
|
0.8770
|
0.8790
|
0.8810
|
0.8830
|
|
1.2
|
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
|
0.9099
|
0.9115
|
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
|
|
1.5
|
0.9332
|
0.9345
|
0.9357
|
0.9370
|
0.9382
|
0.9394
|
0.9406
|
0.9418
|
0.9430
|
0.9441
|
|
1.6
|
0.9452
|
0.9463
|
0.9474
|
0.9485
|
0.9495
|
0.9505
|
0.9515
|
0.9525
|
0.9535
|
0.9545
|
|
1.7
|
0.9554
|
0.9564
|
0.9573
|
0.9582
|
0.9591
|
0.9599
|
0.9608
|
0.9616
|
0.9625
|
0.9633
|
|
1.8
|
0.9641
|
0.9649
|
0.9656
|
0.9664
|
0.9671
|
0.9678
|
0.9686
|
0.9693
|
0.9700
|
0.9706
|
|
1.9
|
0.9713
|
0.9719
|
0.9726
|
0.9732
|
0.9738
|
0.9744
|
0.9750
|
0.9756
|
0.9762
|
0.9767
|
|
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
|
|
2.2
|
0.9861
|
0.9865
|
0.9868
|
0.9871
|
0.9875
|
0.9878
|
0.9881
|
0.9884
|
0.9887
|
0.9890
|
|
2.3
|
0.9893
|
0.9896
|
0.9898
|
0.9901
|
0.9904
|
0.9906
|
0.9909
|
0.9911
|
0.9913
|
0.9916
|
|
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
|
|
2.6
|
0.9953
|
0.9955
|
0.9956
|
0.9957
|
0.9959
|
0.9960
|
0.9961
|
0.9962
|
0.9963
|
0.9964
|
|
2.7
|
0.9965
|
0.9966
|
0.9967
|
0.9968
|
0.9969
|
0.9970
|
0.9971
|
0.9972
|
0.9973
|
0.9974
|
|
2.8
|
0.9974
|
0.9975
|
0.9976
|
0.9977
|
0.9977
|
0.9978
|
0.9979
|
0.9980
|
0.9980
|
0.9981
|
|
2.9
|
0.9981
|
0.9982
|
0.9983
|
0.9983
|
0.9984
|
0.9984
|
0.9985
|
0.9985
|
0.9986
|
0.9986
|
|
3.0
|
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
|
0.9992
|
0.9992
|
0.9993
|
0.9993
|
|
3.2
|
0.9993
|
0.9993
|
0.9994
|
0.9994
|
0.9994
|
0.9994
|
0.9994
|
0.9995
|
0.9995
|
0.9995
|
|
3.3
|
0.9995
|
0.9995
|
0.9995
|
0.9995
|
0.9996
|
0.9996
|
0.9996
|
0.9996
|
0.9996
|
0.9997
|
PrintDone
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