The CHARRIE, INC.

had developed the following costs and other data pertaining to one of its raw materia
Normal monthly use……………………………………… 6,250 units
Maximum monthly use…………………………………… 8,000 units EOQ =
Minimum monthly use…………………………………… .4,500 units
Average working days per month…………………………. 25 days
Lead time………………………………………………… 15 days =
Ordering cost per order…………………………………. 115.60
Unit cost of material……………………………………… 15.00
Carrying cost rate………………………………………….. 10% =

Required: Determine the following

Economic Order Quantity =
Reorder point EOQ =
Safety stock
ROP =

SS =

LT Daisly u
one of its raw materials. √
AU Annual usage
√2(AU) (CO) CO Cost to place an order
CU CU Carrying Cost per unit

√2(75,000)(115.60)

17,340,000.00
1.5

√11,560,000
3,400.00 units

(Maximum daily usage) (LT)

320 units
4800 units
(Maximum daily usage - Normal daily usage) (LT)
320 units - 250 units
1050 units

3750 units
The following cost and other data for one of the material requirements of ISABEL TRADING & MANUFACT
Normal usage per day……………………………………… 600 units
Maximum usage per day…………………………………… 700 units
Minimum usage per day…………………………………… 500 units
Working days per year…………….…………………………. …240days EOQ =
Lead time…………………………………………………….........12 days
Cost of placing one order……………………………………. …. 25.00
Annual carrying cost per unit………………………………………5.00
Required: Determine the following
Economic Order Quantity
Reorder point
Safety stock

ROP
SS
TRADING & MANUFACTURING CORP. are given below

AU Annual usage
√2(AU) (CO) CO Cost to place an order
CU CU Carrying Cost per unit

7,200,000.00
5
1,440,000.00 get the squareroot
1200 units

8400 units
1200 units
HANDY TOOLS, INC. buys 1,500 units of item every
quarter. The cost per order is P200 while the carrying
cost per unit is P5, and vary directly with inventory
investment. Each unit is currently purchased at P40.

Required:
a. Determine the current ordering cost and carrying cost.
b. Determine the EOQ and the related ordering and carrying costs.

EOQ = 2,400,000.00
5
= 480,000.00
= 693 units

OC number of orders 8.65800865801

CC 346.5
TOTAL
Ordering Cost = (# of order/s) (CO)
Carrying cost = (average level of inventory) ( CU)

OC = 4* 200 800
CC = (1500/2)*5 = 3750
Total 4550

6000

get the squareroot

9 200 1,800.00
5 1732.5
3,532.50
save 1,017.50