After making some wise short term invnesments at a race track, Chris Low had some additinoal cash to invest in a business. The most promising opportunity at the time was building supplies, so Low bought a business that specailized in sales of one size of nail. The annual volume of nails was 2,000 kegs, and they were sold to retail customers in an even flow. Low was uncertain how many nails to order at any time. Initially, only two cost concerned him: ordering processing cost, which were $60 per order without regard to size, and warehouseing cost, which were $1 per year per keg space. This meant that Low had to rent a constant amount of warehouse space for a year, and it had to be large enough to accomadate an entire order when it arrived. Low was not worried about maintaining safety stocks, mainly because the outward flow of goods was so even. Low bout his nails on a delivered basis.

1) What is the annual demand in units (D)?

2) What are the ordering costs per order (B)?

3) What are the carrying costs per unit (I)?

4) If the carrying costs of the inventory (C) expressed as an annual percentage of the inventory's dollar is 25% (0.25), what is the EOQ?

Use the following equation, keeping in mind that you need to perform the calculations under the square root symbol FIRST, then take the square root:

D - annual demand, in units B ordering costs C carrying costs of the inventory (expressed as annual %) I dollar value of the inventory, per unit 2 x DxB EOQ I x C