A pharmacy has estimated that the average daily demand for a particular medication is 30 packages,...

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A pharmacy has estimated that the average daily demand for a particular medication is 30 packages, $12. The pharmaceutical co

business Operations-Management

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Answer 1

Answer #1

Answer: - According to given data

Average daily demand = 30 packages, Standard deviation = 4 packages

Annual demand = 300 days * 30 packages = 9000 packages

Cost price = $12, Ordering cost = $9 and Holding cost = 2%*cost = $0.24

Lead time = 4 days, Service level = 96% = z value = 1.75

a) Optimal order quantity = √2*D*S/H

= √2*9000*$9/$0.24 = 821.5 ~ 822 packages

b) Reorder point = demand during lead time + safety stock

Average demand during lead time = 30 packages *4 days = 120 packages

Safety stock = z * standard deviation of demand * √L

= 1.75*4*√4 = 14

Reorder point = 120 packages + 14 packages = 134 packages

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Answer 2

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A pharmacy has estimated that the average daily demand for a particular medication is 30 packages,...

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