Operations & Systems Management

Week 11: Inventory Management Homework

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 |

|  |  |Σ = 100.0 |

What are the appropriate ABC groups of inventory items? (20 points)

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)

8,000 “C” items (counted every 100 days)

How many items should be counted per day? (20 points)

Problem 3:

Assume you have a product with the following parameters:

[pic]

Holding cost per [pic] per unit

Order [pic] per order

What is the EOQ? (20 points)

CAUTION: If you calculate Problem 3 incorrectly, you will most likely miscalculate the remaining two problems. The answer to Problem 3 feeds data into Problems 4 and 5.

Problem 4:

Given the data from Problem 3,...