Business, 07.10.2021 01:00 keishlav5183

A hospital uses two types of surgical kits (M1 and M2). They use a (Q, R) system with a service level of 94%. Each time they place an order, there is a transaction cost of $500 (independent of order size). Each surgical kit costs $60 and they use a discount rate of 18%. Annual demand for each is normally distributed: M1 has a mean of 8,000 and a standard deviation of 2000; M2 has a mean of 7,000 and a standard deviation of 3000. Leadtime is 1.5 months. They are considering using only one type of surgical kit and have found that mean demand would be approximately the same. Determine how the safety stock, cycle stock, and pipeline stock will change if they go to a single kit type.

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A hospital uses two types of surgical kits (M1 and M2). They use a (Q, R) system with a service leve...