ULOa. Discuss just-in time inventory management and define the theory of constraints as
used to management inventory.
Read each problem carefully and provide what is being required.
Problem 1 (adapted)
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:
Economic order quantity
Number of orders in a year
Average inventory based on EOQ
Total carrying cost, ordering costs and relevant inventory costs at EOQ
Total relevant costs for order sizes of 2,000 units, 1,000 units, 600 units, 250 units
and 100 units