The new medical supply discounter, Life Alert Inc., provides a certain type of titanium stent which costs $5,000. The annual holding cost rate is 25 percent, annual demand is 600, and the order cost is $200 per order. The lead time is 3 days. Because demand is variable (the patients may not always be ready for surgery), Life Alert has decided to establish a customer service level of 95 percent. The distributor is open 300 days per year.
A) What is the optimal order quantity?
B) What is the safety stock?
C) What is the reorder point?

Question

Quizplus · Accepted Answer

The Answer of The new medical supply discounter, Life Alert Inc., provides a certain type of titanium stent which costs $5,000. The annual holding cost rate is 25 percent, annual demand is 600, and the order cost is $200 per order. The lead time is 3 days. Because demand is variable (the patients may not always be ready for surgery), Life Alert has decided to establish a customer service level of 95 percent. The distributor is open 300 days per year.

The New Medical Supply Discounter, Life Alert Inc