e. What would be the annual cost saved by shifting from the 490-bag lot size to the EOQ? The annual holding cost with the EOQ is $(Enter your response rounded to two decimal places.)

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Sam's Cat Hotel operates 52 weeks per year, 5 days per week, and uses a continuous review inventory system. It purchases kitty litter for
$11.25 per bag. The following information is available about these bags. Refer to the standard normal table for z-values.
Demand 85 bags/week
- Order cost $56/order
> Annual holding cost = 28 percent of cost
> Desired cycle-service level = 98 percent
> Lead time=1 week(s) (5 working days)
-Standard deviation of weekly demand = 16 bags
Current on-hand inventory is 300 bags, with no open orders or backorders.
Transcribed Image Text:Sam's Cat Hotel operates 52 weeks per year, 5 days per week, and uses a continuous review inventory system. It purchases kitty litter for $11.25 per bag. The following information is available about these bags. Refer to the standard normal table for z-values. Demand 85 bags/week - Order cost $56/order > Annual holding cost = 28 percent of cost > Desired cycle-service level = 98 percent > Lead time=1 week(s) (5 working days) -Standard deviation of weekly demand = 16 bags Current on-hand inventory is 300 bags, with no open orders or backorders.
e. What would be the annual cost saved by shifting from the 490-bag lot size to the EOQ?
The annual holding cost with the EOQ is $. (Enter your response rounded to two decimal places.)
Transcribed Image Text:e. What would be the annual cost saved by shifting from the 490-bag lot size to the EOQ? The annual holding cost with the EOQ is $. (Enter your response rounded to two decimal places.)
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