1. You are the Middle Atlantic Regional Purchasing Manager for the Rite Aid Pharmacy Chain. Your role is to purchase items for the 50 stores in your region. Today, you are placing an order for Witch Hazel from the Becton Dickinson Pharmaceutical Company. The facts are :
2. The Regions Annual Demand, D, for Witch Hazel is 30,000 bottles
3. The Ordering Cost, S, is $20 per order
4. The annual holding cost per unit, H, is $1.20
5. The 50 stores in the chain are open every day of the week except for Christmas Day, New Years Day, Thanksgiving Day, Memorial Day and the Fourth of July
6. Becton Dickinson, your supplier of Witch Hazel, has a 3 day lead time, L, to resupply you.

QUESTIONS:

1. What is the optimal order quantity, Q, for your Region?
2. How many orders per year, N, need to be placed?
3. How many days, T, are there between orders?
4. What is your Reorder Point, ROP, assuming no safety stock will be kept?
5. You and your store managers are considering having a two-day safety stock during the biting insect season (mosquitoes, gnats, etc.,) so what will your Reorder Point be with this safety stock?
6. You are the Becton Dickinson Production Manager for the unit the produces Witch Hazel. You receive the order from the Rite Aid Regional Manager. How many bottles of witch hazel should you produce each time you make it if the following apply:

a) Your setup cost, S, is $10.00

b) Your holding costs, H, are $0.20 per bottle per year,

c) Your daily production rate, p, is 4,000 bottles per day

d) Your daily demand, d, is 2,000 bottles per day

e) Your annual demand, D, 600,000 bottles per year