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Inventory Management

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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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