Question

Hotel Singapura uses plastic litter bags for housekeeping. The hotel places orders for these bags only...

Hotel Singapura uses plastic litter bags for housekeeping. The hotel places orders for
these bags only when the inventory is below the reorder level. The hotel operates for 52
weeks a year, 7 days per week. The bags come in a pack of 12 and costs $10.75 each.
The following information is available about these bags.
Demand = 95 packs/week
Order cost = $58/order
Annual holding cost = 25% of cost
Required service level = 90%
Lead time = 4 weeks (28 working days)
Standard deviation of weekly demand = 16 packs
Records show that there are 315 packs available on-hand and no orders are pending from
the supplier.

(b) Solve what should be the reorder point, ROL. An inventory withdrawal of 10
packs was just made. Discuss whether it is time to reorder or not.

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