Question: A large hospital uses a certain intravenous solution that it maintains in inventory. Assume the hospital uses reorder point method to control the inventory of

A large hospital uses a certain intravenous solution that it maintains in inventory. Assume the hospital uses reorder point method to control the inventory of this item. Assume the hospital operates 52 weeks per year. Pertinent data about this item are as follows:
Forecast of demand ?a=1,000 units per week
Forecast error ?a, std. dev. =50 units per week
Lead time =4 weeks
Carrying cost =25% per year
Purchase price, delivered =$52 per unit
Replenishment order cost =$20 per order
Stockout cost =$10 per unit
In-stock Probability during the lead time =90%
?aNormallydistributed
Due to possible rounding effect, please pick the closest number in the following options.
If the hospital orders 800 units each time, what's the annual stock-out cost?
624
6240
 A large hospital uses a certain intravenous solution that it maintains

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