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    Practice Problems

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    Ishak Firdauzi Ruslan
    This document contains 9 practice problems related to inventory management concepts. Problem 1 involves identifying the appropriate ABC categories for 9 inventory items based on their annual dollar volumes and percentages of total annual volume. Problem 2 asks how many inventory items should be counted per day for items in the A, B, and C categories. Problem 3 provides parameters to calculate the economic order quantity (EOQ) for a product with given annual demand, holding cost, and order cost.

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    Practice Problems

    Uploaded by

    Ishak Firdauzi Ruslan
    108 views2 pages
    This document contains 9 practice problems related to inventory management concepts. Problem 1 involves identifying the appropriate ABC categories for 9 inventory items based on their annual dollar volumes and percentages of total annual volume. Problem 2 asks how many inventory items should be counted per day for items in the A, B, and C categories. Problem 3 provides parameters to calculate the economic order quantity (EOQ) for a product with given annual demand, holding cost, and order cost.

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    For practicing your skill in inventory management

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    This document contains 9 practice problems related to inventory management concepts. Problem 1 involves identifying the appropriate ABC categories for 9 inventory items based on their annual dollar volumes and percentages of total annual volume. Problem 2 asks how many inventory items should be counted per day for items in the A, B, and C categories. Problem 3 provides parameters to calculate the economic order quantity (EOQ) for a product with given annual demand, holding cost, and order cost.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    108 views2 pages

    Practice Problems

    Uploaded by

    Ishak Firdauzi Ruslan
    This document contains 9 practice problems related to inventory management concepts. Problem 1 involves identifying the appropriate ABC categories for 9 inventory items based on their annual dollar volumes and percentages of total annual volume. Problem 2 asks how many inventory items should be counted per day for items in the A, B, and C categories. Problem 3 provides parameters to calculate the economic order quantity (EOQ) for a product with given annual demand, holding cost, and order cost.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 2

    Practice Problems: Chapter2, Inventory Management

    Problem 1:
    ABC Analysis
    Stock Number

    Annual $ Volume

    Percent of Annual $ Volume

    J24

    12,500

    46.2

    R26

    9,000

    33.3

    L02

    3,200

    11.8

    M12

    1,550

    5.8

    P33

    620

    2.3

    T72

    65

    0.2

    S67

    53

    0.2

    Q47

    32

    0.1

    V20

    30

    0.1

    = 100.0
    What are the appropriate ABC groups of inventory items?
    Problem 2:
    A firm has 1,000 A items (which it counts every week, i.e., 5 days), 4,000 B items (counted
    every 40 days), and 8,000 C items (counted every 100 days). How many items should be counted
    per day?
    Problem 3:
    Assume you have a product with the following parameters:
    Annual Demand = 360 units
    Holding cost per year = $1.00 per unit
    Order cost = $100 per order
    What is the EOQ for this product?

    Problem 4:
    Given the data from Problem 3, and assuming a 300-day work year, how many orders should be
    processed per year? What is the expected time between orders?
    Problem 5:
    What is the total cost for the inventory policy used in Problem 3?
    Problem 6:
    Based on the material from Problems 3 5, what would cost be if the demand was actually higher
    than estimated (i.e., 500 units instead of 360 units), but the EOQ established in problem 3 above is
    used? What will be the actual annual total cost?
    Problem 7:
    If demand for an item is 3 units per day, and delivery lead-time is 15 days, what should we use for a
    simple re-order point?
    Problem 8:
    Litely Corp sells 1,350 of its special decorator light switch per year and places orders for 300 of
    these switches at a time. Assuming no safety stocks, Litely estimates a 50% chance of no shortages
    in each cycle and the probability of shortages of 5, 10, and 15 units as 0.2, 0.15, and 0.15
    respectively. The carrying cost per unit per year is calculated as $5 and the stockout cost is
    estimated at $6 ($3 lost profit per switch and another $3 loss of goodwill or future sales). What
    level of safety stock should Litely use for this product? (Consider safety stock of 0, 5, 10, and 15
    units.)
    Problem 9:
    Presume that Litely carries a modern white kitchen ceiling lamp that is quite popular. The
    anticipated demand during lead-time can be approximated by a normal curve having a mean of 180
    units and a standard deviation of 40 units. What safety stock should Litely carry to achieve a 95%
    service level?

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