SURGERY ASSOCIATES

EX11.6 SURGERY ASSOCIATES, a local surgery practice group, orders, implants from device manufacturers. Order quantities for ten items have been determined based on the past two years of usage. Other relevant information from the practice’s inventory records is depicted in Table EX 11.6. The practice is functional for fifty-two weeks a year.
A. Perform a basic EOQ analysis for each item.
B. Classify the implant inventory items according to the ABC analysis.
C. Calculate the yearly inventory management cost.
D. Determine the investment cost (per cycle) for each item.

TABLE EX 11.6
Implant Item No. Yearly Demand Unit Cost Yearly Carrying Rate Ordering Cost
(Unit/Year) of each item
1 104 2,225 12% 6.00
2 260 5,000 10% 5.00
3 728 3,550 8% 12.00
4 1,248 1,205 12% 28.00
5 104 11,100 2% 18.00
6 1,040 1,500 20% 32.00
7 780 1,900 11% 50.00
8 844 3,700 9% 12.00
9 780 6,400 2% 35.00
10 520 2,700 5% 12.00