1.

The following data relate to inventories for a given year of BARBERS COMPANY:

Economic order quantity……………………………………………….. 7,500 units

Cost to place one purchase order………………………………………..75.00
Total cost to place purchase orders for the year………………………..15,000
Cost to carry the unit for one year………………………………………..6.00

Required: What is the estimated annual usage in units?

2.The BARON COMPANY requires 40,000 units of product A for the year. The units will be required evenly throughout the year.
It costs P60 to place an order, and P10 to carry a unit in the inventory for the year.

Required: What is the Economic order quantity ( EOQ)?

3. The following information relates to EMY COMPANY’s material A:

Annual usage……………………………………….. 7,200

Working days per year…………………………. …..240
Normal lead time in working days……….. ………..20
Maximum lead time in working days……. ………..45

Required: Assuming that that the units of material A will be required evenly throughout the year, determine the reorder point in
units?

4. DOLE INC. buys 2,500 units of item ST every quarter. The cost per order is P100 while the carrying cost per unit is P5, and
vary directly with inventory investment.

a. Determine the current ordering cost and carrying cost.

b. Determine the EOQ and the related ordering and carrying costs.

1.The following data relate to inventories for a given year of BARBERS COMPANY:

Economic order quantity……………………………………………….. 7,500 units

Cost to place one purchase order………………………………………..75.00
Total cost to place purchase orders for the year………………………..15,000
Cost to carry the unit for one year………………………………………..6.00

Required: What is the estimated annual usage in units?

2.The BARON COMPANY requires 40,000 units of product A for the year. The units will be required evenly throughout the year.
It costs P60 to place an order, and P10 to carry a unit in the inventory for the year.

Required: What is the Economic order quantity ( EOQ)?

3. The following information relates to EMY COMPANY’s material A:

Annual usage……………………………………….. 7,200

Working days per year…………………………. …..240
Normal lead time in working days……….. ………..20
Maximum lead time in working days……. ………..45

Required: Assuming that that the units of material A will be required evenly throughout the year, determine the reorder point in
units?

4. DOLE INC. buys 2,500 units of item ST every quarter. The cost per order is P100 while the carrying cost per unit is P5, and
vary directly with inventory investment.

a. Determine the current ordering cost and carrying cost.

b. Determine the EOQ and the related ordering and carrying costs.
5.The CHARRIE, INC. had developed the following costs and other data pertaining to one of its raw materials.

Normal monthly use……………………………………… 6,250 units

Maximum monthly use…………………………………. 8,000 units
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

1. Economic Order Quantity
2. Reorder point
3. Safety stock