Beta Industries Is Currently Experiencing Problems with Its Inventory of Hammer

question 153

Essay

Beta Industries is currently experiencing problems with its inventory of hammer heads.Its manager, Laura Engles currently orders the hammer heads in batches of 6,000.Six orders are placed during the year to meet the estimated sales demand of 36,000 units.Each order costs $75 and each unit costs $0.50 to carry.Ms.Engles maintains a safety stock of 1,000 hammer heads.Required:
a.What are Beta's total annual costs (TC)of inventory under its current ordering policy?
b.What is the Economic Order Quantity for Beta Industries?
c.What is the average inventory if Beta uses the EOQ calculated in part b)and it still maintains its 1,000 units of safety stock?
d.What is Beta's annual savings in inventory costs by using the EOQ and maintaining its safety stock?

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Recognize the effects of human activities on biodiversity and ecosystem health.

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Definitions:

Laffer Curve

A theoretical representation of the relationship between government revenue raised by taxation and all possible rates of taxation, suggesting an optimal tax rate for maximizing revenue.

Tax Revenue

The income that is collected by the government through the imposition of taxes on goods, services, and income.

Marginal Tax Rates

The rate at which the last dollar of income is taxed, indicating how much tax will be paid on an additional dollar of income.

Laffer Curve

A theoretical representation of the relationship between tax rates and the amount of tax revenue collected by governments, suggesting that increasing tax rates beyond a certain point is counter-productive for raising tax revenue.