Healthcare Supply Costs Exercise

Economic order quantity (EOQ) is often used in healthcare settings.  EOQ is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. The EOQ formula is best applied in situations where demand, ordering, and holding costs remain constant over time. It is important to remember however that there are limitations to the use of EOQ in healthcare environments. One of the important limitations of the economic order quantity is that it assumes the demand for the companys products is constant over time.

  • Review the reading assigned for the discussion.
  • Complete Exercise 11.8 from Chapter 11 in your textbook by Ozcan.