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    Case 1 Inventory

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    mayank.dce123
    1. The integrated products corporation (IPC) classifies its materials into three classes - A, B, and C - based on cost, volume, and importance to customers. 2. Class A materials represent 20% of materials but 80% of value, Class B materials represent 30% of materials and 15% of value, and Class C materials represent 50% of materials but only 5% of value. 3. The document provides assignments to determine optimal order quantities for materials TS500 and S80 based on costs, demand forecasts, inventory carrying costs, and order processing costs using different inventory management systems.

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    Case 1 Inventory

    Uploaded by

    mayank.dce123
    130 views1 page
    1. The integrated products corporation (IPC) classifies its materials into three classes - A, B, and C - based on cost, volume, and importance to customers. 2. Class A materials represent 20% of materials but 80% of value, Class B materials represent 30% of materials and 15% of value, and Class C materials represent 50% of materials but only 5% of value. 3. The document provides assignments to determine optimal order quantities for materials TS500 and S80 based on costs, demand forecasts, inventory carrying costs, and order processing costs using different inventory management systems.

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    1. The integrated products corporation (IPC) classifies its materials into three classes - A, B, and C - based on cost, volume, and importance to customers. 2. Class A materials represent 20% of materials but 80% of value, Class B materials represent 30% of materials and 15% of value, and Class C materials represent 50% of materials but only 5% of value. 3. The document provides assignments to determine optimal order quantities for materials TS500 and S80 based on costs, demand forecasts, inventory carrying costs, and order processing costs using different inventory management systems.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    130 views1 page

    Case 1 Inventory

    Uploaded by

    mayank.dce123
    1. The integrated products corporation (IPC) classifies its materials into three classes - A, B, and C - based on cost, volume, and importance to customers. 2. Class A materials represent 20% of materials but 80% of value, Class B materials represent 30% of materials and 15% of value, and Class C materials represent 50% of materials but only 5% of value. 3. The document provides assignments to determine optimal order quantities for materials TS500 and S80 based on costs, demand forecasts, inventory carrying costs, and order processing costs using different inventory management systems.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Inventory planning at integrated products corporation

    The integrated products corporation (IPC) is developing ordering policies for its materials
    that it stocks for resale to its customers. The materials have been classified into three classes:

    Class of Materials Description of Material class


    A (example:TS500) Materials that are of high cost, high volume, or otherwise of critical importance to
    customers. While these materials represent only about 20 percent of the number of
    materials, they represent about 80 percent of materials value.
    B Materials that are of moderate cost, moderate volume, or otherwise moderately
    important to customers. These materials represent about 30 percent of the number of
    materials and about 15 percent of materials value.
    C (Example:S80) Materials that are of low cost, low volume, or otherwise of low importance to
    customers. They can usually be obtained on short notice or other materials can be
    substituted. They represent about 50 percent of the number of materials and only
    about 5 percent of materials value.

    Assignment
    1. The TS500 costs 24.95; IPC is forecasting that 10,000 of the parts will be needed
    annually; IPC estimates a 40 percent carrying cost for its inventory per year; it coast
    approximately 100 to process, receive , and inspect an order for these parts; IPC uses
    fixed order quantity inventory system for class A materials . How many of the parts
    should be ordered when the materials is replenished?
    2. The supplier of the TS500 has offered to ship the part at a rate of 100 per day during
    shipping periods via the supplier’s own truck and IPC’s plant works 300 days per
    years. If all other data in no.1 above remains the same: a. How many parts should be
    ordered when the TS500 is replenished? b. What annual saving will come to IPC if
    the new shipping policy is enacted?
    3. The supplier of the TS500 has agreed to give IPC a quantity discount. The cost to IPC
    will be

    Parts ordered per order Cost per part


    1-999 24.95
    1000-4999 24.85
    5000+ 24.8

    If all other data in no.1 above remain the same: a. How many parts should be ordered
    when the TS500 is replenished? b. What annual saving will come to IPC because of
    quantity discount?
    4. The suppliers of the TS500 has offered to combine its offer of gradual supply during
    shipping periods of no.2 above and the quantity discount offer of no.3 how many parts
    should be ordered when the materials is replenished if all other data remains the same
    as in nos.2 and 3?
    5. The S80 costs 3.4; IPC is forecasting that 8000 parts will be needed annually ; it costs
    approximately 25 to process, receive, and inspect an order for the material; and IPC
    uses a fixed order period inventory system for class C materials. a. How often should
    the materials be ordered? b. if the upper inventory target for S80 is to be 1000 parts,
    the present inventory level is 540 parts and the ROP is 300 parts, how many parts of
    the S80 should be ordered?

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