Based on an EOQ analysis, the optimal order quantity is 4,000 units. Annual inventory carrying costs equal 30% of the average inventory level. The company pays P 10 per unit to buy the product and P 400 to place an order. The monthly demand for the product is 5,000 units. REQUIRED: Determine the following: A) Annual inventory carrying costs. B) Annual inventory ordering costs. C) Total inventory costs.

Based on an EOQ analysis, the optimal order quantity is 4,000 units. Annual inventory carrying costs equal 30% of the average inventory level. The company pays P 10 per unit to buy the product and P 400 to place an order. The monthly demand for the product is 5,000 units. REQUIRED: Determine the following: A) Annual inventory carrying costs. B) Annual inventory ordering costs. C) Total inventory costs.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 17P

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