You are applying for a job at a major door and window retailer. The manager would like to evaluate your skills in the area of inventory management and he provides you with the following information:

• Annual demand is 450 windows (an average of 9 every week).
• Average cost of each window is P250.
• Purchase order lead time is 21 days.
• Relevant handling costs are P5,000 per year.
• Relevant ordering costs are P150 per order.
• Shareholders expected return is 8%.
• Shipments are FOB destination.

What is the economic order quantity (EOQ)?

What are the total relevant costs, assuming the order size is 75 units and the relevant carrying costs are P50?