Question

Describe about economic order quantity & classification for drug & equipment?

Answer 1

Economic order quantity is the order quantity of inventory that minimize the total cost of inventory management. Two most important categories of inventory costs are ordering costs and carrying cost. Ordering costs are costs that are incurred on obtaining additional inventories. They include costs incurred on communicating the order ,transportation costs, etc. Carrying costs represent the costs incurred on holding inventory in hand. They include the opportunity cost of money held up in inventories, storage costs, spoilage costs, etc.

Ordering costs and carrying costs are quite opposite to each other. If we need to minimize carrying costs we have to place small order which increases the ordering costs. Of we want to minimize our ordering costs we have to place few orders in a year and this requires placing large orders which in turn increases the total carrying costs for the period.

We need to minimize the total inventory costs and EOQ model helps us just do that.

Total inventory costs =Ordering costs + Holding costs

By taking the first derivative of the function we find the following equation for minimum cost

EOQ = SQRT(2× Quantity × cost per order / Carrying cost per order)

Example

ABC Ltd. Is engaged in sale of footballs.Its cost per order is $400 and its carrying cost unit is $10 per unit per annum. The company has a demand for 20,000 units per year. Calculate the order size, total orders required during a year, total carrying cost for the year.

Solution:-

EOQ = SQRT(2 × 20,000 × 400/10) = 1,265 units

Annual demand is 20,000 units so the company will have to place order ( = annual demand of 20,000 divided by order size of 1,265). Total ordering cost is hence $64,000 ($400 multiplied by 16).

Average inventory held is 632.5 ((0+1,265)/2) which means total carrying costs of $6,325 (I.e. 632.5 × $10).

Classification for drug & equipment:-

Drug can be categorized in a number of ways. In the world of medicine and pharmacology, a drug can be classified by its chemical activity or by the condition that it treats. Anticonvulsant medications, for example, are used to prevent seizures, while mucolytic drug break down mucus and relieve congestion. In regards to addiction treatment and rehabilitation,the drug classifications used most often are the following five classes regulated by the controlled substances Act:

1)Narcotics

2)Depressants

3)Stimulants

4)Hallucinogens

5) Anabolic steroids

All of these drugs, with the exception of anabolic steroids, are considered to be psychoactive- Meaning they affect one or more of the mental faculties including mood,feelings, thoughts, perception, memory etc.

Each of the regulated drugs taht act on the central nervous system or alter your feelings and perceptions can be classified according to their physical and psychological effects. The different drug type include the following:

1)Depressants: Drugs that suppress or slow the activity of the brain and nerves, acting directly on the central nervous system to create a calming or sedating effect. This category includes barbiturates, alcohol and gamma hydroxybutyrate .Depressants are taken to relieve anxiety, promote sleep and mange seizure activity.

2)Stimulants:- Drugs that accelerate the activity of the central nervous system. Stimulants can make you feel energetic, focused, and alert. This class of drugs can also make you feel edgy,angry or paranoid.

3) Hallucinogens:- Also known as psychedelic, these drugs act on the central nervous system to alter your perception of reality, time,and space. Hallucinogen may cause you to hear or see things that don't exists or imagine situations that aren't real.

4) Opioids:- These are the drugs that act through the opioid receptors. Opioids are one of the most commonly prescribed medicines worldwide and are commonly used to treat pain & cough.

5) Inhalants:- these are broad class of drugs with the shared trsit of being primarily consumed through inhalation. Most of the substance in this class can exist in vàpor form at room temperature. As many of these substances can be found as household items,inhalants ate frequently abused by children and adolescents.

6) Cannabis:- Cannabis is a plant - derived drug that is the msot commonly used illicit drug worldwide. It's acts through the cannabiniod receptors in the brain. Cannabis is abused in various forms including bhang,ganjs,charas and hashish oil.