Clear Lake

544 Words3 Pages
Clear Lake Hospital is a not-for-profit hospital in Iowa. It operates 230 beds and provides acute care. The area, which the hospital is located, is a summer destination with vacation homes and fishing activity. The hospital carries more than 10,000 different items of inventory. These items have different price, order lead times and stockout costs. The new hired Chief Financial Officer, Julio Ruiz, believes that the system used for maintaining the inventories results carrying excess inventories. He bases his assumption on the fact that when the hospital faced occupancy rates near to 100 percent, incidents or even possibility of stockout did not occur. The inventory items are classified in to tree categories based on the annual usage and the cost of each unit. More specifically, the hospital gathers data of the average annual usage and unit cost of each item. The usage and the cost is called stock keeping unit (SKU). The dollar usage is calculated for every SKU by multiplying the average annual usage with the cost of each unit. The SKUs are arrayed from highest to lowest converted per...
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