Continuous review inventory system

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Reference no: EM132234861

Sam’s Cat Hotel operates 52 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $11.70 per bag. The following information is available about these bags.

Demand = 90 bags/week

Order cost = $50/order Annual holding cost = 25 percent of cost

Desired cycle-service level = 99 percent

Leadtime = 3 weeks (18 working days)

Standard deviation of weekly demand = 15 bags

Current on-hand inventory is 120 bags, with open orders of 100 and no backorders.

1) What is the economic order quantity?

2) How much safety stock is required to maintain a service level of 99 percent?

3) What is the average demand during leadtime?

4) What is the appropriate reorder point?

5) What is the inventory position? Should Sam’s hotel need to place a new order now? How many to order?

6) What is the annual cycle-inventory costs for Sam’s Cat Hotel?

7) If weekly demand becomes constant, what is required safety stock?

8) If weekly demand becomes constant, what is a new reorder point?

9) If weekly demand becomes constant, what is Sam’s annual cycle-inventory costs?

Reference no: EM132234861

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