1 A hospital orders its blood from a regional blood bank.

Each year, the hospital uses an average of 1,040 pints of Type O blood. Each order placed with the regional blood bank incurs a cost of $20. The lead time for each order is one week. It costs the hospital $20 to hold 1 pint of blood in inventory for a year. The per-pint stockout cost is estimated to be $50. Annual demand for Type O blood is normally distributed, with standard deviation of 43.26 pints.

Determine the optimal order quantity, reorder point, and safety stock level. Assume that 52 weeks  1 year and that all demand is backlogged. To use the techniques of this section, what unrealistic assumptions must be made? What

(s, S) policy would be used in this situation?