1.The expected annual usage of a particular material is 540,000 units, and the standard order size is 36,000 units. The invoice cost of each unit is P900, and the ordering cost per order is P240. Assuming the company does not maintain safety stock.

• What is the average inventory?
• What is the ordering cost?

2.The order cost per order of an inventory is P400 with an annual carrying cost of P10 per unit.

• What is the Economic order quantity for an annual demand of 2,000 units?

3.Norina Corp. Uses 10,500 yards of material X each day to make shirts. It usually takes 10 days from the time Norina orders the material when it is received. If Norina desired a safety stock of 21,000 yards,

• What is the order point?

4.The following are annual cost of Peter Corp. relating to Material A which required 40,000 units per year:

Unit Cost

Insurance costP20

Storage cost32

Freight in36

Order cost10

Interest that could have been earned on alternative investment of funds P320,000

• What is the annual carrying cost per unit?

5.Senen has an order point at 1,400 units, usage during the normal lead time of 600, and EOQ 4,000 units.

• What would be its maximum inventory, assuminglead time and usage is normal?