1. Assuming that Charlene Corporation has an optimal order quantity of 5,000. The company desires a safety stock of 250 units. A 7-day lead time is needed for delivery. Annual inventory carrying costs equal 20% of the average inventory level. The company pays P5 per unit to buy the product, which it sells for P8. The company pays P100 to place a detailed order, and the monthly demand for the product is 5,000 units. How much is the total ordering costs? Show solution. Answer is P2,400

2. Smart Products buys 300,000 units of a crucial input per year from a supplier that fulfils its orders within two days of receiving them. Smart Products submits its orders directly to the supplier through a web interface, so its lead time is its supplier's two-day turnaround time. Each order costs Smart Products about P500 to place, while carrying costs are about P60 per unit per year. The company seeks to maintain a five day usage level in a safety stock. (Assume a 365-day year.) What is the company's carrying cost at the EOQ? Show solution. Answer is P313,665