Would County Hospital consume 2000 boxes of bandages per week. The price of bandages is $35 per box, and the hospital operates 52 weeks per year. The cost of processing an order is $15, and the cost of holding one box for a yearis 15 percent of the value of the material.

1. The hospital orders bandages in lot sizes of 1000 boxes. What extra cost does the hospital incur, which it could saveby using the EOQ method?

2. Demand is normally distributed, with a standard deviation of weekly demand of 100 boxes. The time is 2 weeks. What safety stock is necessary if the hospital uses a continuous review system and a 90 percent cycle-service levelis desired? What should be the reorder point?

3. If the hospital uses a periodic review system, with T = 4 weeks, what should be the target inventory level, q?