There was an ending balance of 169,000 tablets of chlorpropamide 250 mg. The lead time is ninety days, the total consumption for the past six months was 162,000 tablets, and the procurement period is six months. No stock out period. Based on the information given above, calculate the following
1: Average monthly consumption?
2: Safety stock?
3: Quantity to order (packs)?
4: Total costs?
(N.B: pack size= 1,000; use adjustment= probable pack price= 27.90 USD)
1: Average monthly consumption
Total consumption for the past six months = 162,000 tablets
Average monthly consumption = Total consumption / 6 months
Average monthly consumption = 162,000 / 6 = 27,000 tablets
2: Safety stock
Lead time = 90 days
Safety stock = Average monthly consumption x Lead time
Safety stock = 27,000 tablets x 90 days = 2,430,000 tablets
3: Quantity to order (packs)
Ending balance = 169,000 tablets
Consumption for next 6 months = 27,000 tablets per month x 6 = 162,000 tablets
Total quantity needed = Ending balance + Consumption for next 6 months + Safety stock
Total quantity needed = 169,000 + 162,000 + 2,430,000 = 2,761,000 tablets
Quantity to order (packs) = Total quantity needed / pack size
Quantity to order (packs) = 2,761,000 / 1,000 = 2,761 packs
4: Total costs
Total costs = Quantity to order (packs) x Probable pack price
Total costs = 2,761 x 27.90 USD = 77,103.90 USD
Therefore, based on the calculations above, the answers are:
1: Average monthly consumption = 27,000 tablets
2: Safety stock = 2,430,000 tablets
3: Quantity to order (packs) = 2,761 packs
4: Total costs = 77,103.90 USD