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Finals-assignment-Chapter-15.docx - 1 Tidehunter Company's...

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1. Tidehunter Company's inventory carrying cost per unit is P25 and its stockout cost (cost of not having the inventory when needed) per unit is P10. It makes 9 purchase orders a year. The company plans to maintain a safety stock quantity of either 200 units or 300 units. The following data were gathered for further analysis: Total Needs Available Stock Excess demand Probability 600 600 0 0.5 800 600 200 0.3 1000 600 400 0.2 1200 600 600 0.1 Required: a. Total safety stock costs at 200 units b. Total safety stock costs at 300 units c. The optimal safety stock that the company should maintain 2. Leshrac Corporation routinely funds its checking account to cover all checks when written. An analysis of the checking account revealed that the firm could maintain an average account balance that is 25% below the current level and adequately cover all checks presented. The average account balance is currently P900,000. If the firm can earn 10% on short-term investments, what possible step might the Company take and how much earnings can be realized from such?
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