Support EOQ: Hospital Glove Simulation (UOP)

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Important Note: OTA's do not provide material that a student can simply print-off and submit as their own! The job of the OTA is NOT to write an essay for the student, but to provide ideas, definitions, research help, and instructions on how the student should approach the problem.

Thus, the following is a "start" ....it is the answer key to the Inventory Management simulation exercise used in MGT/554...... you should add your own additional words to customize the answers to your own individual style of writing (otherwise your teacher would notice that someone else other than you wrote the answers)......hope this helps you.

Basis for the case study
While an inventory manager needs to control thousands of products required in a hospital, for
the purpose of this simulation, we have considered just surgical and exam gloves. The objective here is not to minimize inventory or maximize service, but to have the right amount on hand to support the competitive priorities of the hospital.

Cycle 1 (Jul-Aug)
Rationale for the feedback
The learner's performance is assessed on the following aspects:
1. Forecasted demand and the quantity ordered vs. the actual usage
To make accurate forecasts, the learner has to observe demand trends in the historical
data and inventory records. The system checks the demand forecasted and the total
quantity ordered for two months with the actual usage, and feedback is provided for the
following conditions:
? If total quantity ordered < actual usage
? If total quantity ordered > actual usage
? If total quantity ordered = actual usage
In this case, the optimal solution is when the learner forecasts demand and orders a
quantity that is equal to the actual usage (+/- 10%) after taking into account the on-hand
inventory.
2. Lot size vs. the EOQ and the inventory costs
Economic order quantity is the lot size that minimizes total annual inventory holding and
ordering costs. However, in reality, it may not be possible to order a lot size that is exactly
equal to the EOQ. The learner has to refer to the EOQ values and consider the minimum
order quantity offered by the vendor to decide the lot size. The system checks the lot size
with the EOQ, and provides feedback on the following conditions:
? If lot size < EOQ
? If lot size > EOQ
? If lot size = EOQ
In this case, the optimal solution is when the learner decides on a lot size that is equal to
the EOQ (+/- 10%) after taking into account the inventory costs and the minimum order
quantity.
3. Safety stock maintained vs. the optimal value
To maintain a cycle service level of 99 percent, the learner has to keep a safety stock
level of z&#963;L, where z is the number of standard deviations from the mean needed to
implement the cycle service level and &#963;L is the standard deviation of demand during lead
time probability distribution. The system checks the safety stock levels decided with the
optimal safety stock ...