Reference no: EM132612704
Acme Industries has the following information for inventory management of their product.
Cost: $1.40 per unit
Annual demand: 160,000 units
Average demand per week: 3,200
Required rate of return on investment: 8%
Purchase order lead time: 21 days
Relevant carrying costs per year (e.g. insurance, material handling etc.): $8,000
Relevant ordering costs per order: $95
Required:
Question a. Determine the economic order quantity (EOQ) for the product.
Question b. Determine the total relevant costs (TRC) using EOQ.
Question c. Determine the number of orders placed each time period for the product.
Question d. Determine the re-order point for the product.
Question e. Determine the Total cost for the product.
Question f. Briefly explain your calculations from a, b, and d above.
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