Assignment # 5- Inventory

1. Johann Raphael experiences an annual demand of P 420,000 for computer disc at the JRDC
Computer Shop. It costs Johann P 220 to place an order and his carrying cost is 12 percent of
the average inventory of 7,500 units.
Determine the EOQ

2. The annual demand for printer at the Greynor Computer Shop is P800,000 and the carrying cost
is 12 ½ % of the average inventory 12,000 units. The shop estimated order costs to be P 300 per
order.
Determine the EOQ

3. The annual demand for printer ink at the MAC2 Machines, Inc. is P 750,000 and the carrying cost
is 15 percent of the average inventory of 15,000 units. The company estimated order costs to
be P400 per order.
Determine the EOQ

4. Joshua experience an annual demand of P 500,000 for electric drills at the JC Hardware Store. It
cost Joshua P 150 to place an order and his carrying cost is 18 percent.
a. How often should Joshua place an order an order per year
b. How many units per order should Joshua place for the drills?

5. The annual demand for school bags at the Patricia Bags Company estimated P 600,000 and the
carrying cost is 20%. The company estimate order costs to be P 250 per order.
a. Find the optimal number of days’ supply per order.
b. Find the optimal number of units per order if the selling price is P 110 per bag.

6. Isabela Manufacturing Company uses P 900,000 annually of a particular ingredient in its

assembly department. The purchasing manager estimates the ordering cost at P 600 and the
annual storage cost of 22 percent.
a. Determine the optimal number of orders per year.
b. Determine the number of days’ supply per order
c. Determine the optimal number of peso per order.

7. A bank uses a certain form at a uniform rate of 60 pads per week during each of the 52 weeks
per
year it is in operation. Every replenishment order it places is delivered at one time. No minimum
inventory is carried. The cost of placing and receiving an order is $15. The purchase price is $ 2
per pad. The inventory carrying cost, in terms of an amount per pad per year, is estimated to be
25% of the unit purchase price is $2. The lead time is three weeks.

a. Determine the value of the EOQ

b. With the use of the given data and the calculated value of the economic lot size,
determine the following:
1. Reorder point
2. Maximum inventory
3. Average inventory
4. Average number of orders per week
5. Average order cost per week
6. Average carrying cost per week
7. Relevant total average cost per week
8. Relevant total average cost per year.