Question

Dr. Christina Yang decided to start a Large Cardiothoracic surgical research center in Switzerland. Her local N-95 supplier charges $1 per box of masks plus a $8 delivery fee (the $8 fee is independent of the amount ordered). Dr. Yang’s holding cost is $0.01 per box per month. she needs 500,000 boxes per month. . Suppose Dr. Yang orders 500,000 boxes each time. On average, how many orders does she place with her supplier each year? . How boxes should Dr. Yang order from her supplier with each order to minimize the sum of the ordering and holding costs? .What is the minimum possible sum of Dr. Yang’s annual ordering and holding costs (in $)?Choose the nearest dollar . If Dr. Yang orders 100,000 boxes of N-95s, what would be Dr. Yang’s annual ordering plus holding costs (in $)?

Answer 1

Dr. Yang orders N-95 masks 12 times a year at her current ordering rate. She should calculate the Economic Order Quantity (EOQ) to minimize costs, which involves using specific inventory management formulas. Ordering 100,000 boxes would also alter her total costs, which can be determined by the same cost formulas.

Step-by-step explanation:

The question pertains to the optimal order quantity and associated costs, which involves applying the Economic Order Quantity (EOQ) model and inventory management principles.

Dr. Yang places orders 12 times a year, as she orders 500,000 boxes each time, which is her monthly requirement. To minimize the sum of ordering and holding costs, Dr. Yang should determine the EOQ, which is calculated using the formula: EOQ = √(2DS/H), where D is the annual demand, S is the ordering cost per order, and H is the holding cost per unit per year. The minimum possible sum of annual ordering and holding costs can be found by substituting the EOQ into the total cost formula: TC = ((D/Q) * S) + ((Q/2) * H), where Q is the order quantity. If Dr. Yang orders 100,000 boxes, she will place 5 orders per year (because 500,000 divided by 100,000 is 5), leading to a different total cost which can also be calculated using the total cost formula mentioned above.