Single-use surgical staplers provide a means for surgeons to close wounds or connect tissues without sutures

Subject:Operations ManagementPrice:2.86 Bought8

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Single-use surgical staplers provide a means for surgeons to close wounds or connect tissues without sutures. The cost for a high quality, circular stapler is $400 for a UHN hospital. Typically, surgeons at UHN perform 20 surgeries per week requiring such staplers. The cost to store a stapler - reflecting both the opportunity cost as well as the storage and tracking costs - is approximately $50 per year. The administrative cost of placing orders is typically about $500.

a) How many staplers should they order at a time?

b) How often do they order (in weeks)?

c) What is the annual cost of holding/ordering?

d) Suppose the hospital can choose to order every 4 weeks, 8 weeks, or 16 weeks. Assuming constant, non-random demand, which ordering interval should the hospital choose (4, 8, or 16) and what will be the annual cost of holding/ordering?