Note: For questions 13, refer to the following scenario:

Arizona Health Services (AHS), a large hospital system, dispenses 250,000 bottles of brand name pharmaceuticals annually in one of its hospitals (assume a constant daily demand). The optimal safety stock, which is on hand initially, is 1,000 bottles. Each bottle costs $10, the holding cost is $.10/unit, and the cost of placing an order with the supplier is $175. Assume an interest rate of 5% and a lag time of 5 days.

What is the economic order quantity?

A. 1,000

B. 2,475

C.4,950

D.7,071

What is the total cost of the pharmaceuticals?

A. $2,503,166

B. $2,506,187

C.$2,508,308

D. $5,016,616

What is the re-order point for the pharmaceuticals?

A. 684

B. 2,054

C.3,424

D.4,424