Acme Industries Is Currently Experiencing Problems with Its Inventory of Anvils.Its

question 151

Essay

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:
a.What are Acme's total annual costs (TC)of inventory under its current ordering policy?
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?

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Definitions:

Relaxation

A state of reduced physiological and mental stress, often achieved through techniques like deep breathing or meditation.

Sensory Experiences

Perceptions or sensations gathered through sight, sound, touch, taste, and smell by the sensory organs.

Hallucinogens

Drugs that powerfully change perception and can trigger sensory experiences in the absence of any inputs.

Stimulants

Substances that increase physiological or nervous activity in the body, often used to enhance alertness, attention, and energy.