Uses continuous review inventory system

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Reference no: EM132234934

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 = $50/order Annual holding cost = 25 percent of cost Desired cycle-service level = 99 percent Leadtime = 3 weeks (18 working days) Standard deviation of weekly demand = 15 bags Current on-hand inventory is 120 bags, with open orders of 100 and no backorders.

1) What is the inventory position? Should Sam’s hotel need to place a new order now? How many to order?

2) What is the annual cycle-inventory costs for Sam’s Cat Hotel?

3) If weekly demand becomes constant, what is required safety stock?

4) If weekly demand becomes constant, what is a new reorder point?

5) If weekly demand becomes constant, what is Sam’s annual cycle-inventory costs?

Reference no: EM132234934

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