Solution-Compute the carrying costs associated with service

Compute the carrying costs associated with service level

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Reference no: EM132707593

Angela Martínez is in charge of maintaining hospital supplies at a Hospital in the Metropolitan Area. During the past year, the mean lead lime demand for bandage BX-5 was 60. Furthermore, the standard deviation for BX-5 was 7. Angela would like to maintain a 90% service level.

Problem a. What safety stock level is recommended for BX-5?

Problem b. However, her supervisor believes that the service level should be either 95% or 98%. Compute the safety stock level for each of these service levels. Why the selection of service level is very relevant in this case?

Problem c. Moreover, Angela knows that the carrying cost of BX-5 is 50 cents per unit per year. Compute the carrying costs associated with a 90%, a 95%, and a 98% service level.

Problem d. What is the trade-off between efficiency and equity faced by the Inventory Manager in this Hospital?

Reference no: EM132707593

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Compute the carrying costs associated with service level

Reference no: EM132707593

Reference no: EM132707593

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