Sams Cat Hotel Sams Cat Hotel operates 52 weeks per year, 7 days per week, and uses a continuous review inventory system. It purchases Kitty Litter for $16.38 per bag. The following information is available about these bags:

Demand 125 bags/week

Order Cost $75.00 per order

Annual Holding Cost 27% of cost

Desired Cycle-Service Level 80%

Lead Time 3 weeks (21 working days)

Standard Deviation of weekly demand 21 bags

Current on Hand Inventory 450 bags

Open Orders or Backorders 0

SHOW YOUR CALCULATIONS

A. What is the Economic Order Quantity (EOQ) for Kitty Litter?

B. What would be the average time between orders (in weeks)?

C. What would the Re-order Point (R)) be?

D. An inventory withdrawal of 50 bags was just made Is it time to re-order?

E. The store currently uses a lot size of 700 bags (Q = 700). What would be the annual cost saved by shifting from the 700 bag lot size to the EOQ?

NOTE: Your report should be 3 to 5 pages in length. Please use this form and fill in the blanks for the 5 questions.

The subject is Inventory Management