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    MS Inventory and Cash MGT For Discussion

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    Dia Mae Generoso
    The document contains information about inventory management and cash management problems. For inventory management, it discusses calculating economic order quantities, total relevant costs, and reorder points for companies with various demand levels, ordering costs, and carrying costs. For cash management, it provides information about optimal transaction sizes, average cash balances, number of transactions, and total costs for a company that needs to convert securities to cash on a quarterly basis.

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    MS Inventory and Cash MGT For Discussion

    Uploaded by

    Dia Mae Generoso
    111 views1 page
    The document contains information about inventory management and cash management problems. For inventory management, it discusses calculating economic order quantities, total relevant costs, and reorder points for companies with various demand levels, ordering costs, and carrying costs. For cash management, it provides information about optimal transaction sizes, average cash balances, number of transactions, and total costs for a company that needs to convert securities to cash on a quarterly basis.

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    Original Title

    MS-Inventory-and-Cash-mgt-for-discussion

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    The document contains information about inventory management and cash management problems. For inventory management, it discusses calculating economic order quantities, total relevant costs, and reorder points for companies with various demand levels, ordering costs, and carrying costs. For cash management, it provides information about optimal transaction sizes, average cash balances, number of transactions, and total costs for a company that needs to convert securities to cash on a quarterly basis.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    111 views1 page

    MS Inventory and Cash MGT For Discussion

    Uploaded by

    Dia Mae Generoso
    The document contains information about inventory management and cash management problems. For inventory management, it discusses calculating economic order quantities, total relevant costs, and reorder points for companies with various demand levels, ordering costs, and carrying costs. For cash management, it provides information about optimal transaction sizes, average cash balances, number of transactions, and total costs for a company that needs to convert securities to cash on a quarterly basis.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Inventory Management

    Problem 1

    The ReignLyn Tags Company produces a luggage and bag tag product, and has the following
    information available concerning its inventory items:

    Annual demand - 50,000 units per year


    Purchase price - ₱35 per package
    Ordering costs - ₱250 per purchase order
    Carrying costs - 10% of purchase price plus: ₱4.50

    1. What is the economic order quantity? (round-off final answer in whole units)
    2. What are the total relevant costs at the economic order quantity? (use EOQ rounded-off to 5 d.p.;
    total relevant costs round-off to 2 decimal places)
    3. What are the total relevant costs, assuming the quantity ordered equals 1,000 units?

    Problem 2
    ABC Company sells 20,000 units of radio evenly throughout the year. The cost of carrying one unit in
    inventory for one year is P8, and the purchase order cost per order is P32.
    Required:
    1. What is the company’s economic order quantity (EOQ)?
    2. How much is the total ordering and carrying cost using the EOQ?
    3. How much is the total ordering and carrying cost if the company’s order size is at 500 units?

    Problem 3
    Yana Corp’s monthly material requirement used in production is 4,050 units. This material costs P180 per
    unit for a supplier and it requires 5 days lead time from the date of order to date of delivery. The ordering
    cost is P120 per order and the carrying cost is 8% of inventory investment per unit. (Use 360 days).
    Determine the following:

    1. EOQ
    2. Frequency of order
    3. Total inventory cost
    4. Reorder point
    5. Safety stock if maximum daily usage is 150 units
    6. Reorder point if maximum daily usage is 150 units

    Cash Management

    Problem 4

    Assume that the fixed cost of selling marketable securities is P10 per transaction and the interest rate on
    marketable securities is 8% per year. The company estimates that it will make cash payments of
    P12,500,000 per quarter.

    Required:
    1. Optimal Transaction size
    2. Average cash balance
    3. Number of times (during the year) the company has to convert marketable securities to cash
    4. The total cost of converting marketable securities to cash
    5. Total carrying cost of cash

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