What extra costs does wood county hospital incur

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Reference no: EM133256212

Assignment:

Wood County Hospital consumes 500 boxes of bandages per week. The price of bandages is $70 per box. The hospital operates 52 weeks per year. The cost of processing an order is $60, and the cost of holding one box for a year is 15% of the value of the material.

a. The hospital orders bandages in lot sizes of 900 boxes. What extra costs does the hospital incur, which it could save by applying the EOQ concept?

b. Demand is normally distributed with a standard deviation of weekly demand being 100 boxes. The lead-time is half of a week. What safety stock is necessary if the hospital uses continuous review inventory system, and a 97% service level? What should be the reorder point?

c. What would be the safety stock if lead time was changed from 0.5 week to 2 weeks and lead time was not constant, with variance of lead time of (2weeks)^2? What would be the reorder point?

Reference no: EM133256212

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