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Sta Rosa Toys, a large manufacturer of toys and dolls, uses large quantities of free in its doll production process. Throughout the year, the firm uses 1,250,000 squa cloth. The fixed costs of placing and receiving an order are P2,000, which includes charge at the mill. The price of the cloth is P2,50 per square yard, and the annual this inventory item is 20percent of the price. Sta. Rosa maintains a 12,500 squ stock. The cloth supplier requires a 2 week lead time from order to delivery.
Problem 1: What is the EDQ for this cloth?
Problem 2: What is the average inventory peso value, including the safety stop
Problem 3: What is the total cost of ordering and carrying the inventory, safety stock?
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