Republic of the Philippines

Batangas State University

THE NATIONAL ENGINEERING UNIVERSITY

College of Accountancy, Business Economics

and International Hospitality Management

OM 202 – Inventory Management and Control System

Name: ___________________________________________________________
Section:__________________________
SR CODE:_______________________________

ACTIVITY/QUIZ

Directions:
Solve the following problems completely.
Show you complete solutions.
You can use this word as your answer sheet or you can attach pictures of your solutions.

I. Inventory Problems

1. Find the economic order quantity and the reorder point, given of the following
information:
Annual demand (D) = 10,000 units
Ordering cost (S) = $75 per order
Annual holding cost (H) = $6 per unit
Lead time (L) = 5 days
The company operates 250 days per year

2. Tacky Souvenirs sells lovely handmade tablecloths at its island store. These
tablecloths cost Tacky $15 each. Customers want to buy the tablecloth at a rate of
240 per week. The company operates 52 weeks per year. Tacky, the owner,
estimates his ordering cost at $50. Annual holding costs are 20 percent of the unit
cost. Lead time is 2 weeks. Using the information given,
a) Calculate the economic order quantity (EOQ)
b) Calculate the total amount costs using the EOQ
c) Determine the reorder point

3. A manufacturer of plastic bottles needs 1500 kg of raw material each year and
sources it from its supplier. Every time the manufacturer places an order, it incurs a
cost of $20. The carrying cost rate is 25% per year. The purchasing price of raw
material is based on the size of the order as shown below:
Cost per kg: $1.00 for order size between 0 and 499 kg.
: $0.99 for order size between 500 and 999 kg.
: $0.98 for order size above 1000 kg.
Assuming all-units discount, determine the feasible and optimal order quantity.

ITEM NAME ANNUAL DEMAND UNIT PRICE

Potatoes 5000 kg $ 4 per kg
Chili Powder 800 kg $ 40 per kg
Salt 1200 kg $ 0.50 per kg

Prepared By:

Mr. JOJO V. CONTI

 Republic of the Philippines
Batangas State University
THE NATIONAL ENGINEERING UNIVERSITY

College of Accountancy, Business Economics

and International Hospitality Management

Instructor
Guest Lecturer II

(Use this space for your solutions)