SCENARIO: A retail cosmetics chain carries three (3) types of skin products: face cream, lotion, and

powder. Given the following information, solve for what is asked. (6 items x 5 points)

PRODUCT ORDER COST CARRYING DEMAND

COST
Face P 540 P 90.00 2,000 units
Cream
Lotion P 1,800 P 65.25 1,000 units
Powder P 675 P 56.25 900 units

FACE CREAM
 EOQ=√ (2) (Annual units required) (Ordering Cost)
Carrying costs per unit
¿ √ (2) (1,000) (1,800)
65.25
Economic Order Quantity = √3,600,000
65.25
= √55 ,172.41
EOQ = 234.88807973 or 234.89

No. of orders= Annual units required

How many orders are made each EOQ
year? = 1,000
234.89
No. of orders= 4.2573 467379

Time ¿ order= 360 days

What is the frequency of placing no. of orders
an order? ¿ 360 days 4.2573
Time ¿ order ¿ 84.56 days 84.559708702

Ordering Cost=No. of orders x Cost per unit

Ordering Cost = 4.2573 x 1800
Ordering Cost= ₱ 7,663.224

Carrying Cost = Average inventory x Carrying cost per unit

= (234.88807973) (65.25)
Carrying cost 2
= (177.445) (65.25)
Carrying Cost = ₱ 7,663.224

Total Inventory Total Inventory Cost =Ordering Cost +Carrying Cost

Costs = 7663.22+ 7663.28
Total Inventory Cost = ₱ 15,326. 448

LOTION
 EOQ=√ (2) (Annual units required) (Ordering Cost)
Carrying costs per unit
= √ (2) (900) (675)
Economic Order Quantity 56.25
= √1, 215 ,000
56.25
= √21, 600
EOQ = 146.96938457

No. of orders= Annual units required

How many orders are made each EOQ
year? ¿ 900 146.96
No. of orders= 6.123 7243568

Time ¿ order= 360 days

no. of orders
What is the frequency of placing ¿ 360 days
an order? 6.1237243568
Time ¿ order= 58.787753828 days

Ordering Cost=No. of orders x Cost per unit

Ordering Cost ¿ 6.1237243568 x 67 5
Ordering Cost= ₱ 4,133.513941 or ₱ 4,133.51

Carrying Cost = Average inventory x Carrying cost per unit

Carrying cost = (146.96938457) (56.25)
2
= (73.484692285) (56.25)
Carrying Cost = ₱ 4,133. 513941𝗏₱ 4,133.51

Total Inventory Cost =Ordering Cost +Carrying Cost

Total Inventory Costs ¿ ₱ 4,133.513941+ ₱ 4,133.513941
Total Inventory Cost = ₱ 8, 267. 027882𝗏₱ 8, 267.03

POWDER