Brooke Army Medical Center dispenses 250,000 bottles of brand name pharmaceutical annually. The optimal safety stock (which is on hand
initially) is 1,000 bottles. Each bottle costs the center $10, inventory carrying costs are 30 percent, and the cost of placing an order with its supplier is $175.
a. What is the economic order quantity?
b. What is the maximum inventory for this medication?
c. What is the center's average inventory of bottles of this medication?
d. How often must the center order (in days)?
ANSWER
Ordering costs			F	$175
Annual usage in units			S	250,000
Annual carrying costs			C	30%
Purchase price per bottle			P	$10.00
Days per year			W	360
Safety stock			SF	1,000