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MTM Corporation has been buying product AAA in lots of 1,250 units which represents a three month's supply. The cost per unit is 220. The order cost is P900 per order; and the annual inventory carrying cost per one unit is P25. Assume that the units will be reordered evenly throughout the year.
Determine the following:
Required:
Question 1. Economic order quantity
Question 2. Number of orders in a year
Question 3. Average inventory based on EOQ
Question 4. Total carrying cost, ordering costs and relevant inventory costs at EOQ
Question 5. Total relevant costs for order sizes of 2,000 units, 1,000 units, 600 units, 250 units and 100 units
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