Our hospital uses expensive hip replacement kits. For one particular kit; annual demand is 32 per year on a steady basis. Purchase cost is $17,000, ordering cost is $4,500 regardless of the quantity, carrying cost is $400 per month for each kit and the lead time is 6 weeks.
A) What is the EOQ for these kits?
B) What is the reorder point level?
C) If there were a 20% discount on purchases of 10 or more, how would our ordering change?