1. The demand for wrappers in a department stores gift wrapping section is 100 pieces per year....

Question:

1. The demand for wrappers in a department store’s gift wrapping section is 100 pieces per year. If the ordering cost is P500 per order and annual unit carrying cost is 10% of the unit purchase price, what should the order quantity be given the following unit purchase prices?

Unit Purchase PriceOrder Quantity

P5.00 .......1 – 1,999 pieces

P4.00 ...... 2,000 – 4,999 pieces

P3.00 ....... 5,000 or more

2. Company stocks an item that is consumed at the rate of 50 units per day. It costs the company P 1,000 each time an order is placed. An inventory unit held in stock for a week will cost P5.

a. Determine the Economic Order Quantity

b. Determine the Optimum number of orders per year (based on 365 days per year).

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