Team 3 Hardy Hospital Case Study

Topics: Saving, A Little Bit, A Little Bit Longer Pages: 3 (436 words) Published: April 27, 2015


      TEAM 3 
Krystal Dickout 
Delmar Franks 
Vanessa Pena 
Michael Piatek  
 

Hardy Hospital Case Study 
 
1. What are good estimates of order cost and inventory holding cost? ( State all  assumptions and show all computations.)  
○ Order Cost:  
■ $20.00 per hr x 1.5 hr (Average purchase order processing cost)  

            =  $30.00 (Total purchase order cost)  ■ $30.00/3 (sku per purchase order) = ​
$10.00  
○ Inventory Holding Cost: 
■ $4.60 (Square foot price) x 36,750 (SQFT of storage space)  

            = $169,050 (Total storage space cost)  ■ 5 (Workers) x $32,000 (Salary per year)  
            = $160,000 (Total salaries per year) x .20 (Benefits and overhead costs)              = $32,000 (Total benefits and overhead cost)              $160,000 + $32,000 = $192,000 (Total employee cost)  ■ Obsolescence and taxes = $200,000 

■ $169,050 + $192,000 + $200,000 = ​
$561,050 
 
2. What is the EOQ and reorder point for Strike Disinfectant given your answer to 

Question 1? 
○ EOQ:  
■ D: 151.19 cases (11.63 gallons/4 (gallons per case) x 52)  ■ Co: $10 Order cost 
■ I: 13.52% ($561,050/4.15 million) 
■ C: $84.20 Cost per case 
■ Ch: 11.38 case (84.20 x .1352)  



■ EOQ = √(2 x 151.19 x 10)/(11.38 case)  

√(3023.80/11.38)  
√(265.71/1775) = ​
16.30 cases (65.2 gallons) 
○ Reorder point: 
■  Demand Rate: 11.63 / 4 = 2.9075 cases 
■ D: 2.9075 case per week 
■ L: Lead Time 2 weeks  
■ 2.9075 x 2 = ​
5.815 or 6 cases 
 
3. Compute the total order and inventory­holding costs for a Fixed Quantity System 

(FQS) and compare to their current order Q's. Can you save money by adopting  an FQS? 
 
4. What are your final recommendations? Clearly explain your reasoning.  ○ As long as demand is constant it will reduce stock-outs and reduce high stock

level. It will begin to make just-in-time supply.
○ Implement a new information system based on EOQ model and fixed quantity

system for items that notably...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • hardy hospital case study answers Essay
  • case study Essay
  • case study Essay
  • Case Study Essay
  • Brl Hardy Case Study Essay
  • Lincoln Hospital Case Study Essay
  • Case Study- General Hospital Essay
  • A case study on outsourcing of hospitals Essay

Become a StudyMode Member

Sign Up - It's Free