Mary County Hospital consumes 1,000 boxes of bandages per week. The price of bandages is ?$36 per? box, and the hospital operates 52 weeks per year. The cost of processing an order is ?$15?, and the cost of holding one box for a year is 20 percent of the value of the material.
a. The hospital orders bandages in lot sizes of 800 boxes. What extra cost does the hospital? incur, which it could save by using the EOQ? method?
?(Enter your response rounded to two decimal? places.)
b. Demand is normally? distributed, with a standard deviation of weekly demand of 100 boxes. The lead time is 2 weeks. Refer to the standard normal table for ?z-values.
What safety stock is necessary if the hospital uses a continuous review system and a 97 percent? cycle-service level is? desired?
?(Enter your response rounded to the nearest whole? number.)
What should be the reorder? point?
?(Enter your response rounded to the nearest whole? number.)
c. If the hospital uses a periodic review? system, with P equals=2 ?weeks, what should be the target inventory? level, T??
?(Enter your response rounded to the nearest whole? number.)