Reference no: EM132562496

Experience suggests that usage of surgical gloves at a hospital can be approximated by a Normal distribution with a standard deviation of one-half box of surgical gloves per day and a mean of five boxes of surgical gloves per day.

If ordering cost is $10 per order, annual holding cost is $10 per box, two days are required to fill an order surgical glove.

Question a) Determine the economic order quantity, (250 workdays a year).

Question b) If the hospital reorders when the surgical gloves on hand and on order is 12 boxes, calculate the risk of a stock-out during a lead time.

Question c) What shortage risk does the hospital incur if it orders 36 boxes when the amount on hand is 12 boxes If a fixed interval of seven days, instead of the EOQ/ ROP model, is used for reordering