1. You are performing an internal audit in factory which has established an improvement (learning curve) 70%. Unit number one of the current model being produced requires 8,000 labor hours to construct. How many cumulative average labor hours per unit should be required to construct 8 units?
2. Otis company buys pingpong balls at P25 per dozen from its wholesaler. Otis will sell 35,000 dozen baseball evenly throughout the year. Otis desires a 12% return on investment (cost of capital) on its inventory management. In addition, rent, insurance, taxes, etc for each dozen pingpong balls in inventory is P0.50. The order cost is P10. Lead time is constant at two weeks and there are 50 working weeks in a year. The maximum expected requirement per week is 850 dozens.

Required: Determine the

a. Economic Order Quantity

b. Safety stock

c. Reorder point