Linen Inventory Security Cost-Benefit Following is information for a 120-bed facility Purchases Discards Closing Actual Initial Par levels inventory Needed to Over (Short) Benefit Probabilit Estimated Potential Daily usage inventory count get to par loss loss Oct 1 Oct 31 Oct 31 levels 0.7 Petty thefts Restitution or lawsuit $2,500 $800,000 0.2 $1,750 70% reduction in petty thefts $160,000 20% probability that an $800,000 loss will be prevented $161,750 Bath towels 0 17 70 312 280 280 Hand towels 180 96 10 891 807 891 300 0 2 1810 Wash cloths 400 1660 1,810 Cost 96 8 1846 3 Bed sheets 380 1754 1846 276 0 6 268 4 Pillow cases 300 268 Electronic surveillance $150,000 162 0 11 154 5 Blankets 200 154 162 0 4 158 _6 Bedspreads 150 158 Benefits exceed costs, hence it is worth investing $150,000 230 0 2 224 27 224 200 Mattress pads 18 19 Notes: Par levels for pillow cases, blankets, bedspreads, and mattress pads are not based on daily usage x5 because they are infrequently changed. 20 21 22 Review the housekeeping linen inventory sheet and establish the par levels based on daily usage. Note that not all items require par levels at daily usage x 5. Discards can amount to pilferage. Hence, discards should be authorized by the Nursing Home Administrator. The physical inventory sheet will almost always show some discrepancies. For example, the shortage of 150 wash cloths may be excessive. So establish the par levels for the highlighted items in green Calculate the closing inventory and amounts needed to bring the inventory up to par levels for the highlighted items in green: Chapter 12 Lineninventory.exercise.xlsx