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    Problem 2 (KMT Corp)

    Uploaded by

    Kyle Vincent Saballa
    The document calculates economic order quantity (EOQ) for an item with an annual demand of 50,000 units. It determines that the EOQ is 1,000 pesos, which would result in 50 orders per year and an average inventory of 500 pesos. The total relevant inventory costs at this EOQ is 2,500 pesos, which is the sum of the total ordering cost of 1,250 pesos and the total carrying cost of 1,250 pesos.

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    Problem 2 (KMT Corp)

    Uploaded by

    Kyle Vincent Saballa
    378 views1 page
    The document calculates economic order quantity (EOQ) for an item with an annual demand of 50,000 units. It determines that the EOQ is 1,000 pesos, which would result in 50 orders per year and an average inventory of 500 pesos. The total relevant inventory costs at this EOQ is 2,500 pesos, which is the sum of the total ordering cost of 1,250 pesos and the total carrying cost of 1,250 pesos.

    Original Description:

    May this be able to help you in anyway somehow. You're welcome

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    The document calculates economic order quantity (EOQ) for an item with an annual demand of 50,000 units. It determines that the EOQ is 1,000 pesos, which would result in 50 orders per year and an average inventory of 500 pesos. The total relevant inventory costs at this EOQ is 2,500 pesos, which is the sum of the total ordering cost of 1,250 pesos and the total carrying cost of 1,250 pesos.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    378 views1 page

    Problem 2 (KMT Corp)

    Uploaded by

    Kyle Vincent Saballa
    The document calculates economic order quantity (EOQ) for an item with an annual demand of 50,000 units. It determines that the EOQ is 1,000 pesos, which would result in 50 orders per year and an average inventory of 500 pesos. The total relevant inventory costs at this EOQ is 2,500 pesos, which is the sum of the total ordering cost of 1,250 pesos and the total carrying cost of 1,250 pesos.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 1

    Annual Demand AD 50,000

    Ordering Cost OC 25
    Carrying Cost CC 2.5 10%

    =√(2(𝐴𝐷)(𝑂𝐶))/𝐶𝐶
    1. Economic Order Quantity in pesos

    EOQ = Php 1,000


    =√(2(50,000)(25))/2.5

    = 1,000

    2. Number of times raw materials be ordered

    Number of orders = 50 times = AD / EOQ (in pesos)

    = 50,000 / 1,000

    = 50

    3. Average Inventory = EOQ / 2

    AI = Php 500 = 1,000 / 2

    = 500

    4. Total relevant inventory costs at EOQ

    Total ordering cost = 50 x 25


    = 1,250

    Total carrying cost = total ordering cost = 1,250

    Total Cost = 1,250 + 1,250


    = 2,500

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