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The Eagle Mountain Hospital uses disposable surgical packages (Surg Pac) for many of the routine operations. The hospital uses approximately 100 Surg Pac units per month. Elective surgery is scheduled for times when the schedule for other surgery is low so that the demand for Surg Pacs is fairly uniform. Each Surg Pac unit costs R35 in quantities of less than 75 and R32.50 if purchased in quantities of 75 and more. The hospital controller estimates that it cost R8 to process and receive an order. The cost of holding inventory is estimated to be 12% of the purchase price per year. Which order size would you recommend that the hospital use? Annual demand Inventory carrying cost (lowest price) R32.50) Inventory carrying cost (higher price) R35.00) Order cost 1200 (100 x 12) R3.90/unit (12% R4.20/unit (12% R8/order of of

The Eagle Mountain Hospital uses disposable surgical packages (Surg Pac) for many of the routine operations. The hospital uses approximately 100 Surg Pac units per month. Elective surgery is scheduled for times when the schedule for other surgery is low so that the demand for Surg Pacs is fairly uniform. Each Surg Pac unit costs R35 in quantities of less than 75 and R32.50 if purchased in quantities of 75 and more. The hospital controller estimates that it cost R8 to process and receive an order. The cost of holding inventory is estimated to be 12% of the purchase price per year. Which order size would you recommend that the hospital use? Annual demand Inventory carrying cost (lowest price) R32.50) Inventory carrying cost (higher price) R35.00) Order cost 1200 (100 x 12) R3.90/unit (12% R4.20/unit (12% R8/order of of

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Using relevant eoq calculations Which order size would you recommend that the hospital use?
The Eagle Mountain Hospital uses disposable surgical packages (Surg Pac) for many of the routine operations. The hospital uses approximately 100 Surg Pac units per month. Elective surgery is scheduled for times when the schedule for other surgery is low so that the demand for Surg Pacs is fairly uniform. Each Surg Pac unit costs R35 in quantities of less than 75 and R32.50 if purchased in quantities of 75 and more. The hospital controller estimates that it cost R8 to process and receive an order. The cost of holding inventory is estimated to be 12% of the purchase price per year. Which order size would you recommend that the hospital use? Annual demand Inventory carrying cost (lowest price) R32.50) Inventory carrying cost (higher price) R35.00) Order cost 1200 (100 x 12) R3.90/unit (12% R4.20/unit (12% R8/order of of
Transcribed Image Text:The Eagle Mountain Hospital uses disposable surgical packages (Surg Pac) for many of the routine operations. The hospital uses approximately 100 Surg Pac units per month. Elective surgery is scheduled for times when the schedule for other surgery is low so that the demand for Surg Pacs is fairly uniform. Each Surg Pac unit costs R35 in quantities of less than 75 and R32.50 if purchased in quantities of 75 and more. The hospital controller estimates that it cost R8 to process and receive an order. The cost of holding inventory is estimated to be 12% of the purchase price per year. Which order size would you recommend that the hospital use? Annual demand Inventory carrying cost (lowest price) R32.50) Inventory carrying cost (higher price) R35.00) Order cost 1200 (100 x 12) R3.90/unit (12% R4.20/unit (12% R8/order of of
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