Wood County Hospital consumes 1,000 boxes of bandages per week. The price of bandages is $35 per box, and the hospital operates 52 weeks per year.

Wood County Hospital consumes 1,000 boxes of bandages per week. The price of bandages is $35 per box, and the hospital operates 52 weeks per year. The cost of processing an order is $15, and the cost of holding one box for a year is 15 percent of the value of the material.

a. The hospital orders bandages in lot sizes of 900 boxes. What extra cost does the hospital incur, which it could save by using the EOQ method.

b. What safety stock and target inventory level provide an 88 percent cycle-service level?