Chicago Mercy Hospital needs to order drugs that are used to treat heart attack victims. Annually, 500 units of drug 1 and 800 units of drug 2 are used. The unit purchasing cost for drug 1 is $150 per unit, and the unit cost of purchasing drug 2 is $300. It costs $20 to store a unit of each drug for a year. When only drug 1 is ordered, an order for drug 1 costs $400. When only drug 2 is ordered, an order for drug 2 costs $600. If both drugs are ordered at the same time, the cost of placing an order is $800. Chicago Mercy’s annual cost of capital is 18%. Determine a cost-minimizing ordering policy

Chicago Mercy Hospital needs to order drugs that are used to treat heart attack victims. Annually, 500 units of drug 1 and 800 units of drug 2 are used. The unit purchasing cost for drug 1 is $150 per unit, and the unit cost of purchasing drug 2 is $300. It costs $20 to store a unit of each drug for a year. When only drug 1 is ordered, an order for drug 1 costs $400. When only drug 2 is ordered, an order for drug 2 costs $600. If both drugs are ordered at the same time, the cost of placing an order is $800. Chicago Mercy’s annual cost of capital is 18%. Determine a cost-minimizing ordering policy

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 47P

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