An orthopedic physician group practice uses 12cc syringes from Sherwood for their cortisone injections. During the each of last two years, 40000 of them were used in the office. Each syringe costs $1.50. The physician’s office annually discards, on average, 500 of the syringes that have became inoperable (broken, wrong injection material, lost). The syringes are stored in a room that occupies 2% of the storage area. The storage area constitutes 10% of the leased space. The annual office lease costs $60,000. The group practice can secure loans from a local bank at 6% interest to purchase the syringes. For each placed order, it takes about three hours for an office assistant (whose hourly wage is $9.00 and who receives $3.25 in fringe benefits) to prepare, and communicate the order, and place its shipment in storage. In addition, each order’s overhead share of equipment and supplies (phone, fax, computer, stationary paper) is approximately $4.50. In the past, the office assistant always placed 5,000 syringes in each order. The deliveries are made in boxes of 1000 syringes and are always received three working days after the order is placed. What are the investment costs? How many times in a year should an order be placed
An orthopedic physician group practice uses 12cc syringes from Sherwood for their cortisone injections. During the each of last two years, 40000 of them were used in the office. Each syringe costs $1.50. The physician’s office annually discards, on average, 500 of the syringes that have became inoperable (broken, wrong injection material, lost). The syringes are stored in a room that occupies 2% of the storage area. The storage area constitutes 10% of the leased space. The annual office lease costs $60,000. The group practice can secure loans from a local bank at 6% interest to purchase the syringes. For each placed order, it takes about three hours for an office assistant (whose hourly wage is $9.00 and who receives $3.25 in
What are the investment costs?
How many times in a year should an order be placed?
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