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Arizona Health Services (AHS), a large hospital system, dispenses 250,000 bottles of brand name pharmaceuticals annually in one of its hospitals (assume a constant daily demand). The optimal safety stock, which is on hand initially, is 1,000 bottles. Each bottle costs $10, the holding cost is $0.10/unit, and the cost of placing an order with the supplier is $175. Assume an interest rate of 5% and a lag time of 5 days. What is the total cost of the pharmaceuticals? A. $2,503,166 B. $2,506,187 C. $2,508,308 D. $5,016,616 Option A & B have both been marked wrong on a prior test

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Operation Management, Management Studies

Category:- Operation Management
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