Question

?Sam's Cat Hotel operates 49 weeks per? year, 5 days per week. It purchases kitty litter for $ 6.50per bag. The following information is available about these? bags:

Demand= 75 bags/week

Order cost? = ?$65?/order

Annual holding cost? = 25 percent of cost

Desired cycle-service level=92 percent

Lead time? = 1 ?week(s) ?(5 working? days)

Standard deviation of weekly demand? = 10 bags

Current on-hand inventory is 250 ?bags, with no open orders or backorders.

Suppose that? Sam's Cat Hotel uses a P system. The average daily? demand, d, is (75/5), and the standard deviation of daily demand is 4,472 bags.

**a. What P? (in working? days) and T should be used to
approximate the cost? trade-offs of the? EOQ?**

The time between orders, P should be ??? days. *(Please enter
your response to the nearest whole number).*

**b. How much more safety stock is needed than with a Q?
system?**

??? bags *(Please enter your response to the nearest whole
number)*

**c. It is time for the periodic review. How much kitty
litter should be? ordered?**

??? bags *(Enter your response as an? integer.)*

Answer #1

EoQ = = =77.45

P= (EOQ/ D) * 49

= ( 77.45 / 75) * 49 **= 50.6.**

T= d{p+L} Z

= 15(50.6+1(5) ) + *1.75 *4.472 = 892.35= 893

**b. How much more safety stock is needed than with a Q
system?**

safety with p system = 4.474 = 32.13 = 32

Safety stock with Q system = 1.75 *15 = 26.25 =26

safety stock in p system is 6 bags high.

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