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Beta industries are currently experiencing problems with its inventory of hammerheads. Its manager, Laura Engles currently orders the hammerheads in batches of 6000. Six orders are placed during the year to meet the estimated sales demand of 36,000 units. Each order cost $75 and each unit cost $0.50 to carry. Ms. Engles maintains a safety stock of 1,000 hammerheads.
Problem a) What are Beta's total annual costs (TC) of inventory under its current ordering policy?
Problem b) What is the Economic Order Quantity for Beta Industries?
Problem c) What is the average inventory if Beta uses the EOQ calculated in part b) and it still its 1000 units of safety stocks?
Problem d) What is Beta's annual saving in inventory savings costs by using the EOQ and maintaining its safety stock?
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