Reference no: EM133115352

Questions -

A. Joseph The company approximately uses 300 blocks per month. The cost per unit is 20 pesos. Ordering Cost is 450 per order and carrying cost is 20%. As his accountant, Mr. Joseph asked you the following questions:

1. Is our current purchase of 900 blocks economical? If not, how many should units should we order and how much would we save?

2. The ordered blocks are received 5 days after its order, at what point should we order? (Use 30 days for 1 month)

3. Assuming that at most, the company uses 500 blocks, at what point should we order? (Use 30 days for 1 month)

B. Company is currently purchasing 1,800 blocks for its construction business. The company approximately uses 300 blocks per month. The cost per unit is 20 pesos. Ordering Cost is 450 per order and carrying cost is 20%. As his accountant, Mr. Joseph asked you on which term is the most favorable to the company:

a. Order at EOQ with no discount

b. Order 3,600 with 5% discount?

c. Order 3,600 with 10% discount?