1. ACME is trying to decide on an inventory for a common item, notepads. Presently they order 5,000 notepads at a time, and they are wondering if ordering more or less than 5,000 notepads might be more economical. They have been experiencing some problems with being out of stock. The demand for their notepads is 100,000 per year . It costs them 25% of the acquisition cost to keep one note pad in inventory for a year. The order cost is $2.00 and the acquisition cost is $1.00. Assume 365 business days in a year.

If ACME orders 5,000 each time it places an order, on average, approximately how much in $ per year does ACME spend to hold notepads?

a. $325

b. $425

c. $525

d. $625

e. $725

2. ACME is trying to decide on an inventory for a common item, notepads. Presently they order 5,000 notepads at a time, and they are wondering if ordering more or less than 5,000 notepads might be more economical. They have been experiencing some problems with being out of stock. The demand for their notepads is 100,000 per year . It costs them 25% of the acquisition cost to keep one note pad in inventory for a year. The order cost is $2.00 and the acquisition cost is $1.00. Assume 365 business days in a year.

If ACME orders 5,000 each time it places an order, what is ACME’s inventory turns?

a. 10

b. 20

c. 30

d. 40

e. 50