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    Inventory Management: Solutions

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    LovErsMaeBasergo

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    Inventory Management: Solutions

    Uploaded by

    LovErsMaeBasergo
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    8172912

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    16 views3 pages

    Inventory Management: Solutions

    Uploaded by

    LovErsMaeBasergo

    Copyright:

    © All Rights Reserved
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    Chapter 13 - Inventory Management

    CHAPTER 13
    INVENTORY MANAGEMENT

    Solutions
    1. a. Given:

    Determine an A-B-C classification for the following items:

    Annual
    Unit Volume
    Item Cost (00)

    1 $100 25

    2 $80 30

    3 $15 60

    4 $50 10

    5 $11 70

    6 $60 85

    Step 1:
    Determine the Annual Dollar Value (Unit Cost * Annual Volume) for each item and the sum of
    the individual Annual Dollar Values.

    Annual Annual
    Unit Volume Dollar
    Item Cost (00) Value

    1 $100 25
    $2,500
    2 80 30
    2,400
    3 15 60
    900
    4 50 10
    500
    5 11 70
    770
    6 60 85
    5,100

    12,170

    13-1
    Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
    Education.
    Step 2:
    Arrange the items in descending order based on Annual Dollar Values. Determine the A, B, and
    C items. Then, determine the percentage of items and the percentage of Annual Dollar Value for
    each category (round to two decimals).

    Annual
    Dollar Percentage of Percentage of Annual
    Item Value Category Items Dollar Value

    16.67% 41.91%
    6 $5,100 A
    [(1/6)*100] [($5,100/$12,170)*100]

    1 2,500 33.33% 40.26%

    2 [(2/6)*100] [($4,900/$12,170)*100]
    2,400 B
    3 900
    50.00% 17.83%
    5 770 C
    [(3/6)*100] [($2,170/$12,170)*100]
    4 500

    12,170 100.00% 100.00%

    b. Given:
    D = 4,500, S = $36, and H = $10.

    Find the EOQ (round to an integer value):


    2(4,500)36
    Q0  2DS   180 units
    H 10

    c. Given:
    D = 18,000/year, S = $100, H = $40 per unit per year, p = 120 units per day, and u = 90
    units/day.

    Find the economic production quantity (EPQ) (round to an integer value):

    ( )( )
    √√ √ √
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