ACTIVITY 2

INVENTORY MANAGEMENT
Name: Date:
Course: Professor:

Direction: Solve the following problems:

1. Given the following annual demand, annual carrying cost, and cost per order,
compute the economic order quantity and total minimum cost. Give your decision
analysis.
D = 10,000 units per year
Co = Php5,000 per order
Cc = Php25 per unit per year
2. Given the following annual demand, carrying cost, and cost per order, compute
the economic order quantity and total minimum cost. Give your decision analysis.
D = 38,000 units per year
Co = Php2,200 per order
Cc = Php8 per unit per year
3. An inventory system has an annual ordering cost of Php12,000 per order, an
annual per unit carrying cost of Php35, and an annual demand of 3,000 units
(assuming a 365-day year). Compute the following:
a. Economic order quantity
b. Minimum total annual inventory
cost
c. Optimal number of orders per year
d. Optimal time between orders
e. Give your decision analysis
4. The Alpha Shoe Company purchases leather from Beta Textile Mills. The
Alpha Company uses 15,000 yard of leather per year (365 days) to make shoes.
The cost of ordering leather from the textile company is Php100,000 per order. It
costs Alpha Php30 per yard annually to hold a yard of leather in inventory.
Determine:
a. Optimal number of yards of leather the Alpha Company should order.
b. Minimum total annual inventory cost
c. Optimal number of orders per year
d. Optimal time between orders
e. Give your decision analysis