13.26 County Hospital orders syringes from ahospital supply firm. The hospital expects to use 40,000 per year.The cost to order and have the syringes delivered is $800. Theannual carrying cost is $1.90 per syringe because of security andtheft. The hospital supply firm offers the following quantitydiscount pricing schedule.
| QUANTITY | PRICE |
| ????0–9,999 | $3.40 |
| 10,000–19,999 | ?3.20 |
| 20,000–29,999 | ?3.00 |
| 30,000–39,999 | ?2.80 |
| 40,000–49,999 | ?2.60 |
| 50,000+ | ?2.40
|
1. What is the order quantity and total cost at each pricepoint.
2. How would you advise the hospital?
3. Would your recommendation change if yearly demand went up to45,000?
4. What is the reorder point for both demand levels if it takes4 days for supplies to arrive.
5. Realistically demand for syringes is variable, and the dailydemand is normally distributed at 105 a day with a standarddeviation of 10. The lead time for restocking is still 4 days. Ifthe hospital wants a service level of 99%, what is the reorderpoint? How much safety stock does this include?
