Problem 6 Fruitcake Specialists sells 36,000 fruit cakes annually. Annual carying costs are P5 per fruit cake and the ordering costs are P100 per order. The firm has decided to maintain a safety stock of one month's sales or 3,000 fruitcakes. The delivery time per order is 5 days. Assume a 365-day year. Required: a. What is the economic order quantity (EOQ)? b. What is the average inventory? c. How many orders should be placed cach year? d. What is the total inventory cost? e. What is the reorder point?
Problem 6 Fruitcake Specialists sells 36,000 fruit cakes annually. Annual carying costs are P5 per fruit cake and the ordering costs are P100 per order. The firm has decided to maintain a safety stock of one month's sales or 3,000 fruitcakes. The delivery time per order is 5 days. Assume a 365-day year. Required: a. What is the economic order quantity (EOQ)? b. What is the average inventory? c. How many orders should be placed cach year? d. What is the total inventory cost? e. What is the reorder point?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Problem 6
Fruitcake Specialists sells 36,000 fruit cakes annually. Annual carrying costs are
PS per fruit cake and the ordering costs are P100 per order. The firm has decided
to maintain a safety stock of one month's sales or 3,000 fruitcakes. The delivery
time per order is 5 days. Assume a 365-day year.
Required:
a. What is the economic order quantity (EOQ)?
b. What is the average inventory?
c. How many orders should be placed each year?
d. What is the total inventory cost?
e. What is the reorder point?
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