Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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 $13.00 per bag. The following information is available about these bags: > Demand 95 bags/week > Order cost = $60.00/order > Annual holding cost = 25 percent of cost > Desired cycle-service level = 80 percent >Lead time 2 weeks (12 working days) = Standard deviation of weekly demand = 15 bags > Current on-hand inventory is 320 bags, with no open orders or backorders. a. Suppose that the weekly demand forecast of 95 bags is incorrect and actual demand averages only 75 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $ higher owing to the error in EOQ. (Enter your response rounded to two decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Operations Management Creating Value Along the Supply Chain

Authors: Roberta S. Russell, Bernard W. Taylor

7th Edition

9781118139523, 0470525908, 1118139526, 978-0470525906

More Books

Students also viewed these General Management questions

Question

How to find if any no. is divisble by 4 or not ?

Answered: 1 week ago