Explore BrainMass

Inventory Management

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

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

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) ...

Solution Summary

Solution classifies the given items based on ABC approach. It also calculates EOQ and total cost in the given case.

\$2.19