Inventory Management
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The manager of a furniture manufacturing plant hopes to achieve a better allocation of inventory control efforts by adopting an ABC approach to inventory control. The yearly usages are listed below. Classify the items in A, B, and C categories according to annual dollar usage.
Item Annual Usage Unit Cost
L 50 $1,400
M 100 $10
N 30 $900
P 150 $20
R 9 $1,000
S 90 $100
T 2,000 $10
U 200 $10
W 1,000 $60
Item T will be classified as:
A) A item
B) B item
C) C item
D) None of the above
25.(3). Using the data of Question 24, item P will be classified as:
A) A item
B) B item
C) C item
D) None of the above
26.(5) Using the data of Question 24, item R will be classified as:
A) A item
B) B item
C) C item
D) None of the above
27.(4) Given that unit item cost = $25, annual carrying charge = 60%, annual demand = 3600 units and ordering cost = $15 per order, the EOQ is:
A) 60.00
B) 84.85
C) 141.42
D) 293.94
E) 7200
28.(6) The total cost per year for Problem 27, assuming no stockout, is approximately equal to
A) The Total Cost cannot be determined from the given information
B) $636
C) $1,273
D) $6,360
E) $12,727
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Solution Summary
Solution classifies the given items based on ABC approach. It also calculates EOQ and total cost in the given case.
Solution Preview
Please refer attached files for tables and better formatting.
Item T will be classified as:
Correct Answer : B) B item
25.(3). Using the data of Question 24, item P will be classified as:
Correct Answer : C) C item
26.(5) ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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