Question 8

Use the following information for the next two questions.

Geron Company manufactures a line of deluxe office fixtures. The annual demand for its miniature oak file is estimated to be 5,000 units. The annual cost of carrying one unit in inventory is P10, and the cost to initiate a production run is P1,000. There are no miniature oak files on hand, and Geron has scheduled four equal production runs of the miniature oak file for the coming year, the first of which is to be run immediately. Geron has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous.

If Geron does not maintain a safety stock, the estimated total carrying costs for the office fixtures for the coming year based on their current schedule is

Group of answer choices

P5,000

P10,250

P4,000

P6,250

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Question 9

The number of production runs per year of the miniature oak files that would minimize the sum of carrying costs and setup costs for the coming year is

Group of answer choices

5

2

7

4

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Question 10

The Special Chemical Company uses 150,000 gallons of acid per month. The cost of carrying the chemical in inventory is P30 per gallon per year, and the cost of ordering the chemical is P7,500 per order. The firm uses the chemical at a constant rate throughout the year. It takes 21 days to receive an order once it is placed. The reorder point is

Group of answer choices

7,500 gallons.

90,000 gallons.

105,000 gallons.

30,000 gallons.