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How many orders per years should be expected

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The Peace Care Hospital uses 3,500 boxes of sterile bandages per month. The annual holding cost rate per year is 20% of the acquisition price. A typical box of sterile bandages costs $14.50 to purchase. The ordering cost is $25 each time an order is placed, regardless of the order quantity. There is storage space for at most 750 boxes of bandages at any time. The hospital operates 365 days per year. Peace Care Hospital would like to use the EOQ model.

a) How many boxes of sterile bandages should be ordered each time an order is placed if they want to minimize the annual inventory cost?

b) How many orders per years should be expected?

c) What is the expected total inventory (holding and ordering) cost per year?

d) How many days should one order last on average?

Reference no: EM131890695

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