The Box Company used 40,000kg of heavy-duty staples per month. The cost of carrying staples as inventory was P3.14 per kg per year. Every order of the staples P1,300. The company used staples for cardboard boxes that it produced at a constant rate. It wanted to keep stock because the supplier took 21 days to deliver.

Data given: 40,000 kg staples /month

Cost of carrying staples = P3.14/kg/year

P1,300/ cost order

Cardboard boxes produced at a constant rate

Keep stock, takes 21 days to deliver

Questions: a.) What was the economic order quantity of staples?

b.) At what level of inventory of staple should Box Company reorder?