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Problem: The annual demand for admission kits for patients with infectious conditions such as methicillin-resistant staphylococcus aureus (MRSA) and C-diff is 2,200. The purchase price of a kit is $80. The holding cost per unit per year is 20% of the item's price, and the cost of placing an order is $20. Currently, the kits are ordered by the supply team in quantities of 50 and delivered by the supplier one week later. Demand is uncertain and the standard deviation of weekly demand is 10.
A) Calculate the Economic Order Quantity (EOQ) for admission kits
B) How many orders will be placed over a full year if they adopt EOQ. What would the length of an order cycle (time between two consecutive orders) be, assuming 360 days in a year?
C) Determine the annual ordering, holding and total costs for the EOQ quantity
D) Determine the total annual cost associated with the quantity currently ordered by the supply team. Which cost (holding or ordering) is higher and why?
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Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..
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