Determine the order quantity Q, safety stock, and reorder point R
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Question
![[Multi-period inventory] STH hospital currently uses two types of surgical gloves (G1
and G2) for their healthcare workers. The annual demand for each is normally distributed. For
G1 the mean is 5,000 pairs with a variance of 3,000; for G2 the mean is 8,000 pairs with a
variance of 5,000. Each pair of gloves costs $3 (regardless of type), the cost to place an order is
$100, and STH uses an annual holding cost of 20% of the value. Demand between G1 and G2 is
independent. STH uses an (Q,R) system where Q is determined by the EOQ and a service level
of 97% is used. The replenishment lead time is 5 weeks for each glove type. (You can assume
each year has 52 weeks.)
a. Determine the order quantity Q, safety stock, and reorder point R for each type
of gloves.
AB b. According to the risk pooling strategy, STH decides that is will standardize by
using G1 to meet all demand for gloves. Determine the new order quantity Q, safety
stock, and reorder point R for G1](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9e27b5d-0ab8-428e-954d-97d64fc14c61%2F50625445-54eb-47b4-97cc-b18ee4b3f36a%2Fqfcwo9f_processed.png&w=3840&q=75)
Transcribed Image Text:[Multi-period inventory] STH hospital currently uses two types of surgical gloves (G1
and G2) for their healthcare workers. The annual demand for each is normally distributed. For
G1 the mean is 5,000 pairs with a variance of 3,000; for G2 the mean is 8,000 pairs with a
variance of 5,000. Each pair of gloves costs $3 (regardless of type), the cost to place an order is
$100, and STH uses an annual holding cost of 20% of the value. Demand between G1 and G2 is
independent. STH uses an (Q,R) system where Q is determined by the EOQ and a service level
of 97% is used. The replenishment lead time is 5 weeks for each glove type. (You can assume
each year has 52 weeks.)
a. Determine the order quantity Q, safety stock, and reorder point R for each type
of gloves.
AB b. According to the risk pooling strategy, STH decides that is will standardize by
using G1 to meet all demand for gloves. Determine the new order quantity Q, safety
stock, and reorder point R for G1
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