Smart Products buys 300,000 units of a crucial input per year from a supplier that fulfills its

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Smart Products buys 300,000 units of a crucial input per year from a supplier that fulfills its orders within two days of receiving them. Smart Products submits its orders directly to the supplier through a web interface, so its lead time is its supplier's two-day turnaround time. Each order costs Smart Products about P500 to place, while carrying costs are about P60 per unit per year. The company seeks to maintain a five-day usage level in safety stock. (Assume a 365-day year.) What is the company's carrying cost at the EOQ? (Show solution)

The following information is available for Edgar Corporation's Material X

Annual usage of 12,600 units

Working days per year 360 days

Normal lead time 20 days

The units of Material X are required evenly throughout the year. What is the reorder point? (Show solution)

a. 35 units

b. 20th day

c. 700 units

d. 630 units

Presented below are selected data from the financial statements of Russell Corp. for 2011 and 2010

2011 2010

Net income P100,000 P123,000

Cash dividends paid on preferred stock 12,000 15,000

Cash dividends paid on common stock 42,000 38,000

The weighted average number of common shares outstanding 105,000 95,000

Earnings per share are reported on the 2011 income statement as (Show solution)

a. P .44

b. P .55

c. P .84

d. P .95

Ral Co. sells 20,000 radios 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. What is the economic order quantity? (Show solution)

a. 625

b. 400

c. 283

d. 200

Emil Traders, Inc. sells cellphone cases that it buys from a local manufacturer. Emil Traders sells 24,000 cases evenly throughout the year. The cost of carrying one unit in inventory for one year isP11.52 and the order cost per order is P38.40. If Emil Traders would buy in economic order quantities, the total order costs are (Show solution)

a. P921,600

b. P2,304

c. P76,800