Arizona Health Services (AHS), a large hospital system, dispenses 250,000 bottles of brand name pharmaceuticals annually in one of its hospitals (assume a constant daily demand). The optimal safety stock, which is on hand initially, is 1,000 bottles. Each bottle costs $10, the holding cost is $.10/unit, and the cost of placing an order with the supplier is $175. Assume an interest rate of 5% and a lag time of 5 days.
What is the economic order quantity?
A. 1,000
B. 2,475
C.4,950
D.7,071
What is the total cost of the pharmaceuticals?
A. $2,503,166
B. $2,506,187
C.$2,508,308
D. $5,016,616
What is the re-order point for the pharmaceuticals?
A. 684
B. 2,054
C.3,424
D.4,424