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The optimal safety stock which is on hand initially is 1000

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Brooke Army Medical Center dispenses 250,000 bottles of brand name pharmaceutical annually. The optimal safety stock (which is on hand initially) is 1,000 bottles. Each bottle costs the center $10, inventory carrying costs are 30 percent, and the cost of placing an order with its supplier is $175. Orders can be placed only in multiples of 100 units.

a. What is the economic order quantity?

b. How many orders will be placed annually?

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Finance Basics: The optimal safety stock which is on hand initially is 1000

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