5. Economic Order Quantity Jimin Company requires 40,000 units for its signature product BTS. The units will be used evenly throughout the year. The cost to place one order is P 20 while the cost to carry the inventory for one year is P 0.40 per unit. REQUIRED: A) Determine the optimal order quantity (EOQ). B) How many orders should be placed within the year? C) How often should the units be ordered within a year? D) Determine the average inventory in units.

5. Economic Order Quantity Jimin Company requires 40,000 units for its signature product BTS. The units will be used evenly throughout the year. The cost to place one order is P 20 while the cost to carry the inventory for one year is P 0.40 per unit. REQUIRED: A) Determine the optimal order quantity (EOQ). B) How many orders should be placed within the year? C) How often should the units be ordered within a year? D) Determine the average inventory in units.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

5. Economic Order Quantity
Jimin Company requires 40,000 units for its signature product BTS. The units will be used evenly
throughout the year. The cost to place one order is P 20 while the cost to carry the inventory for one year
is P 0.40 per unit.
REQUIRED:
A) Determine the optimal order quantity (EOQ).
B) How many orders should be placed within the year?
C) How often should the units be ordered within a year?
D) Determine the average inventory in units.

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