chapter-17

# chapter-17 - This Accounting Materials are brought to you...

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This Accounting Materials are brought to you by www.everything.freelahat.com CHAPTER 17 INVENTORY MANAGEMENT [Problem 1] Inventory (old) = [P48M/(360 days/8)] = P1,066,667 Inventory (new) = [P48M/(360 days/6)] = 800,000 Decrease in inventory P 266,667 Investment income (P266,667 x 15%) P 40,000 Savings from increased efficiency 260,000 Total increase in income P300,000 [Problem 2] 1. EOQ = [(2 x 3,600 x P200) / P25] = 240 units 2. No. of orders = 3,600 / 240 = 15 orders 3. Average inventory = 240 / 2 = 120 units 4. Ordering costs (15 x P200) P3,000 Carrying costs (120 units x P25) 3,000 Total relevant inventory costs P6,000 [Problem 3] 1. EOQ = [(2 x 16,000 x P15) / P3] = 400 units 2. Ordering costs Carrying costs Order No. of Cost Ordering Average Carrying size orders per order costs Inventory CCPU cost TRIC 6,400 2.5 P 15 P 37.50 3,200 P 3 P9,600 P9,637.50 1,600 10 15 150.00 800 3 2,400 2,550.00 400 40 15 600.00 200 3 600 1,200.00 200 80 15 1,200.00 100 3 300 1,500.00 100 160 15 2,400.00 50 3 150 2,550.00 No. of Orders = Annual demand / Order size Average inventory = Order size / 2

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This Accounting Materials are brought to you by www.everything.freelahat.com 3. EOQ Graph [Problem 4] 1. EPR = [(2 x 40,000 x P40) / P5] = 800 units 2. No. of Set-ups = 40,000 / 800 = 50 3. Ave. inventory = 800 / 2 = 400 units 4. Set-up costs (50 x P40) P2,000 Carrying costs (400 x P5) 2,000 Total relevant inventory costs P4,000 [Problem 5] 1. EOQ = {(2x36,000xP10) / [(P10x10%)+P0.40]} = 717 units 2. 2,000 = [(2x4,000xP2)/CCPU] (2,000) 2 = 16,000 / CCPU CCPU = 16,000 / 4,000,000 CCPU = P.004 3. 200 = [(2x6,000xSUC)/P0.60] (200) 2 = 12,000 SUC / 0.60 24,000 = 12,000 suc SUC = 24,000 / 12,000 SUC = P2.00 4. EOQ = [(2x10,000xP25)/(P1x12.5%)] = 2,000 units 5. EOQ (pesos) = [(2xP36,000xP200)/20%] = P8.485 6. EOQ (pesos) = [(2xP60,000xP30)/1%] = P6,000 no. of orders = P60,000 / P6,000 = 10 7. EOQ = [(2x400xP8)/(P5x20%)] = 80 units
This Accounting Materials are brought to you by www.everything.freelahat.com [Problem 6] 1) 1. Normal usage (10,000 / 250) 40 units Lead time quantity (30 days x 40 units) 1,200 units 2. Safety stock quantity (40 days x 40 units) 1,600 3. Reorder point 2,800 units 2) Normal Usage (30,000 / 300 days = 100 units) 1. LTQ (12 days x 100 units) 1,200 units 2. SSQ (7 days x 100 units) 700 units (12 days x 100 units) 300 units 1,000 3. ROP 2,200 units 4. Ave inventory = (6,000/2) + 1,000 units = 4,000 units c) Lead time usage = 10 days x (6,000/300) = 2,000 units

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