Buenaflor Bed and Bath uses a continuous review inventory system for a particular brand and size of organic material. A bag of this organic material costs P110.00. It operates 365 days a year and uses 5,000 bags per year on a continuous basis. The cost of ordering is P50.00 per order and the cost of carrying per bag is P3. It takes 14 days to receive a shipment after an order is placed. Required: 1. What is the EOQ? Round your answer to whole number. Example 100. 2. If EOQ is used, how many orders should be placed per year? Round your answer to two decimal places. Example 100.05 3. What is the reorder point? Round your answer to whole number. Example 100. 4. If the firm wishes to hold 10 days' usage in inventory as safety stock, compute the reorder point. Round your answer to whole number. Example 100.
Buenaflor Bed and Bath uses a continuous review inventory system for a particular brand and size of organic material. A bag of this organic material costs P110.00. It operates 365 days a year and uses 5,000 bags per year on a continuous basis. The cost of ordering is P50.00 per order and the cost of carrying per bag is P3. It takes 14 days to receive a shipment after an order is placed. Required: 1. What is the EOQ? Round your answer to whole number. Example 100. 2. If EOQ is used, how many orders should be placed per year? Round your answer to two decimal places. Example 100.05 3. What is the reorder point? Round your answer to whole number. Example 100. 4. If the firm wishes to hold 10 days' usage in inventory as safety stock, compute the reorder point. Round your answer to whole number. Example 100.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:PROBLEM 2
Buenaflor Bed and Bath uses a continuous review inventory system for a particular brand and
size of organic material. A bag of this organic material costs P110.00. It operates 365 days a year
and uses 5,000 bags per year on a continuous basis. The cost of ordering is P50.00 per order
and the cost of carrying per bag is P3. It takes 14 days to receive a shipment after an order is
placed.
Required:
1. What is the EOQ?
Round your answer to whole number. Example 100.
2. If EOQ is used, how many orders should be placed per year?
Round your
answer to two decimal places. Example 100.05
3. What is the reorder point?
Round your answer to whole number.
Example 100.
4. If the firm wishes to hold 10 days' usage in inventory as safety stock, compute the reorder
point.
Round your answer to whole number. Example 100.
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