Acme Industries is currently experiencing problems with its inventory of anvils.Its manager, Willy Coy currently orders the anvils in batches of 10,000.Four orders are placed during the year to meet the estimated sales demand of 40,000 units.Each order costs $20 and each unit costs $2 to carry.Mr.Coy maintains a safety stock of 500 anvils.Required:
b.What is the Economic Order Quantity for Acme Industries?
c.What is the average inventory if Acme uses the EOQ calculated in part b)and it still maintains its 500 units of safety stock?
d.What is Acme's annual savings in inventory costs by using the EOQ and maintaining its safety stock?
Definitions:
Early Twentieth Century
A period from 1901 to 1945 characterized by rapid industrialization, social changes, World War I, the Great Depression, and the beginning of World War II.
Triangle Shirtwaist Fire
A catastrophic factory fire in New York City in 1911, leading to significant improvements in industrial safety standards.
Factory Safety Standards
Regulations and guidelines designed to ensure the safety and health of workers in industrial settings.
Urban Areas
Geographical regions characterized by higher population density and vast human features in comparison to areas surrounding them, often centers of commerce, politics, and culture.
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