What is the additional annual income

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Question - Based on an EOQ analysis (assuming a constant demand), the optimal order quantity is 2,500. The company desires a safety stock of 500 units. A 5-day lead time is needed for delivery. Annual inventory carrying costs equal 25% of the average inventory level. The company pays P4 per unit to buy the product, which it sells for P8. The company pays P150 to place a detailed order, and the monthly demand for the product is 4,000 units. Compute for the annual inventory carrying costs.

A firm has daily cash receipts of P300,000. A bank has offered to provide a lockbox service that will reduce the collection time by three days. The bank required a monthly fee of P2,000 for providing this service. If monthly rates are expected to average 6% during the year, what is the additional annual income (loss) of using the lockbox system?

Reference no: EM132940468

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