Par level exercise
Vanie
Chapter12_LinenInventory.exercise1.xlsxSheet1
| Chapter 12 | ||||||||||
| Linen Inventory | Security Cost-Benefit | |||||||||
| Following is information for a 120-bed facility | ||||||||||
| Initial | Purchases | Discards | Closing | Actual | Over | Needed to | Benefit | Probability | Estimated | Potential |
| Daily usage | Par levels | inventory | inventory | count | (Short) | get to par | loss | loss | ||
| Oct 1 | Oct 31 | Oct 31 | levels | Petty thefts | 0.7 | $2,500 | $1,750 | 70% reduction in petty thefts | ||
| Restitution or lawsuit | 0.2 | $800,000 | $160,000 | 20% probability that an $800,000 loss will be prevented | ||||||
| Bath towels | 70 | 312 | 0 | 17 | 280 | 280 | $161,750 | |||
| Hand towels | 180 | 807 | 96 | 10 | 891 | 891 | ||||
| Wash cloths | 400 | 1660 | 300 | 0 | 1,810 | 1810 | Cost | |||
| Bed sheets | 380 | 1754 | 96 | 8 | 1846 | 1846 | ||||
| Pillow cases | 300 | 276 | 0 | 6 | 268 | 268 | Electronic surveillance | $150,000 | ||
| Blankets | 200 | 162 | 0 | 11 | 154 | 154 | ||||
| Bedspreads | 150 | 162 | 0 | 4 | 158 | 158 | Benefits exceed costs, hence it is worth investing $150,000 | |||
| Mattress pads | 200 | 230 | 0 | 2 | 224 | 224 | ||||
| Notes: Par levels for pillow cases, blankets, bedspreads, and mattress pads are not based on daily usage x 5 because they are infrequently changed. |
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