What is the EOQ? Sam’s optimal order quantity is bags

Sam’s Cat Hotel operates 52 weeks per year, 7 days per week, and uses a continuous review inventory system. It purchases kitty litter for $10.75 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 = $58/order Annual holding cost = 28 percent of cost Desired cycle-service level = 90 percent Lead time = 4 week (s) (28 working days) Standard deviation of weekly demand = 10 bags Current on-hand inventory is 300 bags, with no open orders or backorders. a. What is the EOQ? Sam’s optimal order quantity is bags. (Enter your response rounded to the nearest whole number.)


 

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