Economic Order Quantity
Coco Co. is engaged in selling different coconut products. The owner orders
10,830 pcs of coconut every 4 months. The cost charged to the owner every time
he puts his order is Php 2,500.00. The owner also spends Php 5.00 to store each of
the coconuts. Coco Co.’s owner had acquired new knowledge regarding Inventory
Management to minimize its related cost for inventory and wanted to apply it to
his business.
From the data provided. Answer the following questions:
1. What will be the Economic Order Quantity of Coco Co.?
2. How many times Coco Co. should place its order annually if they apply the EOQ
model?
3. How much is the Relevant Cost using the Economic Order Quantity?
4. How much is the Old Cost of Coco Co.?
5. How much will be Coco Co.’s savings on its inventory costs for applying his
newly acquired knowledge regarding inventory management?