SCM EXAM 3 HW study.docx - QUIZ SCM REVIEW EXAM 3 Questions 1.A company that orders at their economic order quantity has an annual ordering cost that is

# SCM EXAM 3 HW study.docx - QUIZ SCM REVIEW EXAM 3 Questions...

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QUIZ SCM REVIEW EXAM 3 Questions 1.A company that orders at their economic order quantity has an annual ordering cost that is half of their total cost.* True 2.Ollah's Organic Pet Shop sells about 4,000 bags of free-range dog biscuits every year. The fixed ordering cost is \$15, and the cost of holding a bag in inventory for a year is \$2.00*What is economic order biscuit EOQ=sqrt 2DS/H =2*4000*15/2=245 Suppose Ollah decides to order 200 bags at a time. What would the total ordering and holding costs for the year be? (For this problem, don't consider safety stock when calculating holding costs.) c. Average weekly demand for free-range dog biscuits is 80 bags per week, with a standard deviation of 16 bags. Ollah uses a continuous inventory review system to manage inventory of the biscuits. Ollah wants to set the reorder point high enough that there is only a 5% chance of running out before the nextorder comes in. Assuming that the lead time is a constant 2 weeks, what should the reorder point be?