Economic Order Quantity Use the Following Information for YOUWILLBECPA CO. (Use 360 Days Per Year)

Annual Demand 29,400 Units

Cost Per Order P15,000

Carrying Cost Per 100 Units P500,000

Compute for the following: (Show your solutions)

1. What is the ideal order quantity to minimize inventory cost?

A. P420

B. P100

C. 420 Units

D. 100 Units

2. What is the frequency of placing an order?

A. 75

B. 294

C. 73

D. 70

3. Total Ordering Cost

A. P15,000

B. P1,000,000

C. P1,050,000

D. P1,050,000

4. Carrying Cost

A. P6,300,000

B. P1,000,000

C. P15,000

D. P1,050,000

5. If the difference of maximum daily usage less ave. Daily usage is 50 units and the company will receive the goods 15 days after placing an order. Compute the safety stock?

A. P50

B. 50 Units

C. P750

D. 750 Units

6. Using the assumption above, compute the maximum daily usage?

A. 250

B. 81.67

C. 131.67

D. 470

7. What is the reorder point if the company considered the safety stock?

A. 490

B. 1,975.05

C. 1,225.05

D. P490