The Peace Care Hospital uses 3,500 boxes of sterile bandages permonth. The annual holding cost rate per year is 20% of theacquisition price. A typical box of sterile bandages costs$14.50 to purchase. The ordering cost is $25 each time anorder is placed, regardless of the order quantity. There isstorage space for at most 750 boxes of bandages at any time. The hospital operates 365 days per year. Peace Care Hospitalwould like to use the EOQ model.

a) How many boxes of sterile bandages should be orderedeach time an order is placed if they want to minimize the annualinventory cost?

b) How many orders per years should be expected?

c) What is the expected total inventory (holding andordering) cost per year?

d) How many days should one order last on average?

Answer rating: 100% (QA)

The EOQ model is given by EOQ 2AOH where A is the annual demand O is the ordering cost per o... View the full answer