Based on an EOQ analysis (assuming a constant demand), the optimal order quantity is 2,500. The company desires a safety stock of 500 units. A 5-day lead time is needed for delivery. Annual inventory carrying costs equal 25% of the average inventory level. The company pays P4 per unit to buy the product, which it sells for P8. The company pays P150 to place a detailed order, and the monthly demand for the product is 4,000 units. Compute for the annual inventory carrying costs. *
Based on an EOQ analysis (assuming a constant demand), the optimal order quantity is 2,500. The company desires a safety stock of 500 units. A 5-day lead time is needed for delivery. Annual inventory carrying costs equal 25% of the average inventory level. The company pays P4 per unit to buy the product, which it sells for P8. The company pays P150 to place a detailed order, and the monthly demand for the product is 4,000 units. Compute for the annual inventory carrying costs. *
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:4G 46. 6:18 O
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Long Problems
Solve the following problems. Show your hand-
written solutions in good accounting form. Omit
peso signs, commas, and decimal places (round
off to nearest peso). Five points each.
Based on an EOQ analysis (assuming
a constant demand), the optimal
order quantity is 2,500. The company
desires a safety stock of 500 units. A
5-day lead time is needed for
delivery. Annual inventory carrying
costs equal 25% of the average
inventory level. The company pays P4
per unit to buy the product, which it
sells for P8. The company pays P150
to place a detailed order, and the
monthly demand for the product is
4,000 units. Compute for the annual
inventory carrying costs. *
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