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UOA Pharmacy orders covid vaccine from a major supplier for $10 per vial. Vials need to be delivered by refrigerated trucks, so each delivery costs
UOA Pharmacy orders covid vaccine from a major supplier for $10 per vial. Vials need to be delivered by refrigerated trucks, so each delivery costs $500. Keeping the vials refrigerated at the pharmacy costs around 1% of the vial cost per month. UoA pharmacy expects the monthly vaccination demand (in vial) to follow the table below for the next eight months. No shortages are acceptable, and left-over inventory at the end of a month will be carried over to the following month. Month Dec Jan Feb Apr May Jun Jul Demand 800 1000 900 850 1050 1100 950 Mar 950 (a) The current ordering policy at UOA Pharmacy is to cover the demand for the next two months every time it places an order. What is the total inventory cost (ordering cost + inventory carrying cost) for the next eight months under this policy? (Use the table below for calculations.) [6 marks) Dec Jan Feb Mar Apr May Jun Jul Total Month Starting Inventory Replenishment Requirement Ending Inventory Ordering cost Inventory carrying cost Total cost (b) is the current ordering policy a proper one? Why/Why not? (2 marks]
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