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The Neurology Unit of DT Medical Centre uses the EOQ model when ordering their supplies. Recently, many doctors expressed their dissatisfaction about the lack of

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The Neurology Unit of DT Medical Centre uses the EOQ model when ordering their supplies. Recently, many doctors expressed their dissatisfaction about the lack of medicine supplies for stroke patients. Three months ago, doctors in-charge in the emergency ward had to use a substitute medicine that was not curative. This problem encouraged the office-in-supply department to re-examine the present inventory policy. The officer managed to collect the following data: Cost of ordering and receiving one order RM180 Cost of storing one pack of medicine RM750 Average use per day 30 small bottles Maximum use per day 40 small bottles Lead time for one order 8 days Annual requisition 7300 small bottles The emergency unit currently does not have any safety stock. This hospital operates 365 days per year. Required: Calculate: Economic Order Quantity (EOC). (5 marks) Re-order point. (5 marks) b. How much total ordering cost and total handling inventory cost must the emergency unit bear based on the present inventory policy? (8 marks) c. Assume that the Emergency Unit intends to store safety stock for that medication. Calculate the total ordering cost and total handling inventory cost based on this new policy. (7 marks)

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