Rudd Company Uses 40,000 Micro-Chips Each Year in Its Production

question 92

Essay

Rudd Company uses 40,000 micro-chips each year in its production of digital cameras. The cost of placing an order is $75. The cost of holding one unit of inventory for one year is $8. Currently Rudd places 20 orders of 2,000 units per order.
Required:
A. Compute the annual ordering cost.
B. Compute the annual carrying cost.
C. Compute the total cost of Rudd's current inventory policy.
D. Compute the economic order quantity.
E. Compute the order cost and the carrying cost for the EOQ.
F. How much money does using the EOQ policy save the company over the policy of purchasing 2,000 micro-chips per order?

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Definitions:

Teratogens

Agents, such as chemicals and viruses, that can reach the embryo or fetus during prenatal development and cause harm.

Stress Hormones

Chemical substances, such as cortisol and adrenaline, released by the body in response to stressors, affecting bodily functions to handle stress.

Premature Birth

The birth of a baby before 37 completed weeks of gestation, often leading to health challenges.

Epigenetic Marks

Chemical modifications to DNA and histone proteins that affect gene expression without altering the DNA sequence, impacting development and health.