Goodness of the service level and current structure

Goodness of the Service Level and Current Structure
Optimal number of vaccines and chance of running out of vaccines
Optimal profitability occurs when total cost equals total expenditure for generating the cost. Assuming that an organization purchases z doses of the vaccine and sells x doses and returns y doses to the Centers for Disease Control and prevention, the following are computations for optimal number of vaccine doses and chance of scarcity.
Cost of vaccine= 4z= 4(x+y)
Revenue= 15x+ y, based on $ 15 sales price and $ 1 buy back price.
Therefore, at optimal level,
4(x+y)= 15x+y
11x-y≥0 ………………. Equation 1
x> 4300 ……………………. 2
15x-3y> 0 …………………. 3
x+y> 4300…………………4
However, equation 2 and 4 only hold if y= 0, for non negative values of x and y.
Consequently, x= 4300 is the optimal number of vaccine doses that the facility can purchase for optimality.
From the confidence interval formula for normal distribution,
Z=(mean-µ)/(standard error)
And mean-µ = zero and this means that Z is not defined.
As Z approaches infinity, however, probability of failure approaches zero. Therefore, at 4300 doses, the facility has a zero percent probability of failure.
Goodness of the service level and current structure
Based on the article, few people go for the vaccine and price could be a barrier, especially with the fact that flue has been dormant in the past decades. This further suggests lack of motivation into vaccination and reduction in price is recommended. Reduction to lower levels such as $ 7 per dose would motivate people into and increase total number of used vaccines. A reasonable profit level would therefore be possible, and even higher levels attained due to higher number of unit sales. Such a reduction in price would also promote quality of health by preventing flue (Thompson 1).
Effects of CDC’s hold on the buy-back policy
A hold in the buy-back policy is likely to reduce facilities’ stock level and therefore limit availability of vaccines. In addition, unused vaccines would lead to greater losses and prompt facilities to charge higher prices on sales. Consequently, holding the buy-back is likely to reduce demand for vaccines and increase burden of flue (Thompson 1).
Works cited
Thompson, Dennis. “ U. S. flu cases continue to climb.” Health Day. January 10, 2014. Web. November 10, 2014. < http://www. chihealth. com/body. cfm? id= 4794&action= detail&ref= 3853641>.