A hospital is administering a polio vaccine (“polio drops”) to children under the age of 5 in Mexico. It costs the hospital $2 to purchase one shot, and they charge $3 for administering it to a child. Unused vaccines are destroyed. The hospital management needs to decide the number of vaccines to be ordered. Since the hospital has been administering these shots for the last 6 years (24 quarters), they have been able to compile the demand for the vaccine. Determine the optimal service level and optimal order quantity, for the vaccine.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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A hospital is administering a polio vaccine (“polio drops”) to children under the age of 5 in Mexico. It costs the hospital $2 to purchase one shot, and they charge $3 for administering it to a child. Unused vaccines are destroyed. The hospital management needs to decide the number of vaccines to be ordered. Since the hospital has been administering these shots for the last 6 years (24 quarters), they have been able to compile the demand for the vaccine.

Determine the optimal service level and optimal order quantity, for the vaccine.

Quarter

Demand

1

15

2

18

3

21

4

15

5

17

6

22

7

20

8

16

9

22

10

18

11

25

12

15

13

26

14

29

15

16

16

30

17

17

18

25

19

18

20

16

21

19

22

23

23

20

24

15

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