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.