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Continuous review inventory system

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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 $11.70 per bag. The following information is available about these bags.

Demand= 90 bags/ week

Order cost= $54/order

Annual holding cost= 27 percent of cost

Desired cycle-service level= 80 percent

Lead Time= 3 weeks (18 working days)

Standard deviation of weekly demand= 15 days

Find the optimal order quantity (EOQ), and compute each of the following when using the EOQ:

Average # orders per year

Average time between orders (in weeks, assuming 52 weeks per year)

Average annual ordering cost

Average cycle stock inventory level

Average annual carrying cost on cycle stock

Average annual ordering + carrying cost

Reference no: EM132474485

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