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:

a. Determine the economic order quantity (EOQ) for the product.

b. Determine the total relevant costs (TRC) using EOQ

c. Determine the number of orders placed each time period for the product.

d. Determine the re-order point for the product.

e. Determine the Total cost for the product.

f. Briefly explain your calculations from a, b, and d above.

Answer rating: 100% (QA)

Acme industries EOQ Details of purchase from existing supplier Annual usgae in units 160000 Ordering ... View the full answer