The Mirae F&B Company predicts that 75,000 units of material will be used during th

expressed to cost P25 per unit. It is anticipated that it will cost P45 to place an
carrying cost is P3.

The following data are given:

Annual usage 75,000.00
Cost per unit 25.00
Carrying cost 3.00
Ordering cost per order 45.00

Required: Solution:
1. Economic Order Quantity (EOQ) 1) EOQ = 2 x Annual requirements x Cost
Carrying cost per unit
1,500.00

2. Optimum number of orders 2) Annual requirements

EOQ
50

3. Average inventory 3) EOQ

2
750.00

4. Total Ordering costs 4) No. of Orders x Cost per order

2,250.00

5. Total carrying cost 5) Average inventory x Carrying co

2,250.00

6. Total costs 6) Total ordering costs + Total Carr

4,500.00
of material will be used during the year. The materials are
d that it will cost P45 to place an order. The annual
g cost is P3.

2 x Annual requirements x Cost Per Order

Carrying cost per unit

Annual requirements
EOQ

EOQ
2

No. of Orders x Cost per order

Average inventory x Carrying cost per unit

Total ordering costs + Total Carrying costs