With the limited information available, we will assume that hospital operates 36
ID: 372861 • Letter: W
Question
With the limited information available, we will assume that hospital operates 365 days in a year. Therefore, average daily demand = 10,000/ 365 = 27.40 ( rounded to 2 decimal places)
HOSPITAL’S AVERAGE DAILY DEMAND FOR GLOVES = 27.40
Because of reason mentioned above, sampling period = 365 days
( More could have been answered if more details provided )
Reorder point should be calculated as :
Reorder point = Average daily demand x Lead time ( days) = 27.40 x 10 = 274
SHE SHOULD REORDER GLOVES WHEN HER INVENTORY LEVEL REACHES 274 UNITS
Explanation / Answer
Hospital purchasing agent Abby Smith needs to order examination gloves for the hospital. Currently, she orders 1,000 boxes of gloves whenever she thinks there is a need. Abby has heard that there is a better way to make this purchase and wants to use economic order quantity (EOQ) to determine how much to order and when to order. She collects the following information
Cost of the gloves: $4.00/box
Carrying costs: 33% or $1.33/box
Cost of ordering: $150/order
Lead time: 10 days
Annual demand: 10,000 boxes/year
Abby decides she will be satisfied if the probability of a stockout is 5%. How much safety stock should Abby Carry?
------------ Boxes
If Abby were to set up a two-bin system for gloves, how many boxes of gloves would be in each bin? Assume that Abby uses her safety stock reorder point. Please include only full boxes of gloves in each bin. Round up or down to whole numbers.
Bin 1
Bin 2
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