What is the economic order quantity for DKU Number 53104 if the forms are ordered from supply A? From supplier B?

Chrome File Edit View History Bookmarks People Tab Window Help M )) $ 56% : Thu 2:43 PM Brandon Q ... k Kindle ( x VitalSol x k Kindle ( x 2 New | X * Homew x Course x Course x G wholef x Assignr X K Kindle ( X G how to x + read.amazon.com/?asin=B07YMSTBN2 B O : Apps kindle Library m. Aa C Search Q 1940s. Clarinda carries more than 10,000 different items of inventory that vary widely in price, order lead times, and stockout costs. (Stockout costs are the total costs that result from running out of stock of a particular inventory item, including higher costs of service caused by scheduling delays or emergency replenishments as well as the costs associated with ec Charts Paragra Assign x k Kindle ( X G how to x + read.amazon.com/?asin=B07YMSTBN2 B O Apps don] GAPENSKI'S CASES IN HEALTHCARE FINANCE, SIXTH EDITI... ume usage (Average annual usage x Unit cost) is calculated for each SKU. Next, these amounts are converted into percentages of total dollar usage, and the SKUs are arrayed from highest to lowest percentage. The SKUs brary are then divided into three groups (or classes)-labeled A, B, and C- using the general guidelines provided in exhibit 28.1. er of rec Classification Inventory Value Inventory Amount EXHIBIT 28.1 Cha ABC Classification O W D 60%-70% 10%-20% Guidance etter of 20%-30% 30%-40% mendatio 10%-20% 50%-60% DOCX eterans To better use the limited resources available for inventory or Case management, Clarinda's managers focus most of their attention on Class he econ er B? he reord Page 183 the total inventory cost (the cost of orde 213 3 60790989 WPX019190- spital would incur under each supplier. BaChrome File Edit View History Bookmarks People Tab Window Help M )) $ 56% Thu 2:43 PM Brandon Q . .. k Kindle ( x VitalSol x k Kindle ( x (15 unre x * Homew x Course x Course x G wholef x () Assignr x k Kindle ( X G how to x + read.amazon.com/?asin=B07YMSTBN2 B O Apps GAPENSKI'S CASES IN HEALTHCARE FINANCE, SIXTH EDITI... A items. The usage rates, stock positions, and delivery times for SKUs in this class are reviewed on a biweekly basis, with control and ordering system data adjusted as necessary. Class B items are reviewed every quarter, while Class C items are reviewed semiannually. Even though this process has served Clarinda well, Marco Munoz, its new chief financial officer, thinks the hospital is carrying excess Charts inventories. He notes that Clarinda has never come close to having a Paragra stockout, even when it has been running near 100 percent occupancy. He atic believes that a thorough review should be undertaken of all Class A items and that inventory turnover might be increased by 25 percent, and hence might lower inventory carrying costs, by trimming current stocks. or Case # 28 To convince Clarinda's CEO, Marco plans to perform a demonstration e economic ord inventory analysis that focuses on the forms used by the surgical er B he reorder point Page 183 the total inventory cost (the cost of orde 138630790989WPX0291400- spital would incur under each supplier. BaChrome File Edit View History Bookmarks People Tab Window Help M )) $ 55% Thu 2:44 PM Brandon Q E ... k Kindle ( x VitalSol x k Kindle ( x (15 unre x * Homew x Course x Course x G wholef x _) Assignr x k Kindle ( X G how to x + read.amazon.com/?asin=B07YMSTBN2 B Apps brandon] GAPENSKI'S CASES IN HEALTHCARE FINANCE, SIXTH EDITI... resume intensive care unit (SICU). Different forms are required for almost every aspect of SICU operations, including records of patient progress; requests for lab tests, blood products, and medications; nurse and Library physician notes; and transfer/ discharge instructions. Exhibit 28.2 shows inventory usage and cost data on the SICU's 25 forms. To begin his demonstration analysis, Marco plans to conduct a new ABC analysis on letter of rec the SICU's inventory. (Clarinda is in the process of converting to web- based forms as part of the transition to electronic medical records, but V letter of ecommendation the paper forms will still be used for several years.) DOCX veterans Page 184Chrome File Edit View History Bookmarks People Tab Window Help M )) $ 7 55% : Thu 2:44 PM Brandon Q . . . k Kindle ( x VitalSol x k Kindle ( x (15 unre x * Homew x Course x Course x G wholef x Assign x k Kindle ( X G how to x + read.amazon.com/?asin=B07YMSTBN2 B O Apps GAPENSKI'S CASES IN HEALTHCARE FINANCE, SIXTH EDITI... EXHIBIT 28.2 Supplier A Units Used Clarinda Community SKU Number Unit Size Unit Cost Annually Hospital: Form Inventory Data for SICU 50071 25 $ 31 50083 25 16 50084 50 18 ary 50091 250 86 28 50100 25 22 50102 250 793 50122 250 196 50129 250 177 N 50131 100 22 of rec 50132 100 98 50138 100 26 50139 50 21 50170 100 50172 100 44 er of 50174 500 50193 25 100 122 N 8 endatio 50194 50206 250 279 50472 100 192 OCX 50475 125 50694 100 18 erans 51060 100 02 53006 50 17 53104 50 66 57134 100 16 CDC Page 184Chrome File Edit View History Bookmarks People Tab Window Help M )) $ 7 55% Thu 2:44 PM Brandon Q .. k Kindle ( x VitalSol x k Kindle ( x (15 unre x * Homew x Course x Course x G wholef x | Assign x k Kindle ( X G how to x + read.amazon.com/?asin=B07YMSTBN2 B Apps GAPENSKI'S CASES IN HEALTHCARE FINANCE, SIXTH EDITI... As part of its commitment to supporting the local economy, Clarinda currently uses a single local source for all of the SICU's forms: Atwood Printing and Office Supplies (Supplier A). Supplier A requires a $25 set- ary up fee on each order, in addition to the cost per unit. Clarinda is considering using a national supplier, Bateman Medical Office Products (Supplier B), which charges no set-up fee but does charge $50 to cover of rec postage and handling. Supplier B takes three days to deliver the forms, as opposed to only one day for Supplier A. Processing each order will er of endatio cost Clarinda another $25, regardless of which supplier is used. Thus, the total order cost is $50 for Supplier A and $75 for Supplier B. OCX Marco's ultimate goal is to use economic ordering quantity (EOQ) erans concepts to select the supplier for all forms used by the SICU. His primary areas of concern are (1) the number of orders placed each year, CDC Page 184"Chrome File Edit View History Bookmarks People Tab Window Help M )) $ 55% : Thu 2:44 PM Brandon Q E ... k Kindle ( x VitalSol X k Kindle ( x (15 unre x Homew x Course x Course x G whole f x ( Assign x k Kindle ( X G how to x + C A read.amazon.com/?asin=B07YMSTBN2 B Apps picture.JR GAPENSKI'S CASES IN HEALTHCARE FINANCE, SIXTH EDITI... Expected annual usage 92 units EXHIBIT 28.3 Clarinda Community Cost per Unit Hospital Cost and Supplier A $66 Usage Data: Blood Supplier B $60 Product Ordering Form Cit (SKU 53104 Inventory Carrying Costs Depreciation 0.0% Storage and handling 17.1 Interest expense 6.6 Property taxes 0.4 Insurance 0.9 Total carrying costs 25.0% Inventory Ordering Costs Supplier A $50 Supplier B $75 Current Safety Stocks Supplier A 2 units Supplier B (estimate) 6 units Delivery Times Supplier A 1 day Q Se Supplier B 3 days CDC AA 31 Page 185Chrome File Edit View History Bookmarks People Tab Window Help M )) $ 55% : Thu 2:45 PM Brandon Q . .. k Kindle ( x | VitalSol x k Kindle ( x - 3 New | X Homew x * Course x Course x G wholef x ( Assignr x k Kindle ( X G how to x + ( - C read.amazon.com/?asin=B07YMSTBN2 B O $ Apps brandon] GAPENSKI'S CASES IN HEALTHCARE FINANCE, SIXTH EDITI... resume In addition to an analysis without safety stocks, Marco is concerned about the impact of safety stocks on the decision. Clarinda currently carries a safety stock of two units of SKU 53104 to protect itself against Library stockouts as a result of delivery delays and/or an increase in the usage rate. When asked how that amount was calculated, the manager of the SICU stated that she didn't know but the hospital had always done it that etter of rec way. However, if Clarinda decides to switch to Supplier B, the manager stated that it seems logical to increase the safety stock to six units to letter of commendation reflect Supplier B's three-times-as-long lead time. The following are of particular interest: the impact of safety stocks on inventory costs, the DOCX safety margins that such stocks would provide against higher-than- veterans expected usage and shipping delays, and whether the current lead time for Supplier A and the estimate for Supplier B make any sense. Page 185Chrome File Edit View History Bookmarks People Tab Window Help M )) $ 55% : Thu 2:45 PM Brandon Q . .. k Kindle ( x VitalSol x k Kindle ( x i (16 unre x * Homew x Course x * Course x G wholef x | Assignr x k Kindle ( X G how to x + - - C read.amazon.com/?asin=B07YMSTBN2 B O Apps pictu GAPENSKI'S CASES IN HEALTHCARE FINANCE, SIXTH EDITI... Marco has heard a rumor that Supplier B is about to offer a 10 percent discount if the entire year's demand (92 units) is ordered at once. He wants to know what the impact of this discount would be on the decision about which supplier to use. How high a discount is needed to make Supplier B less costly than Supplier A is also useful to know. Furthermore, Marco is aware that the forms would not likely be ordered exactly as prescribed by the EOQ model, so he would like to know the impact of ordering variations on total inventory costs. Finally, he knows that Clarinda's CEO has expressed some doubt about the value of the EOQ model in making real-world inventory decisions. "If I'm right in my concerns," he asked, "what other inventory control methods are available to us?" Q - Place yourself in Marco's shoes to see if you can conduct the CDC AA Page 185