Inventory Problems
INVENTORY PROBLEMS: 1. DAT, Inc., produces digital audiotapes to be used in the consumer audio division. DAT lacks sufficient personnel in its inventory supply section to closely control each item stocked, so it has asked you to determine an ABC classification. Here is a sample from the inventory Records:
Develop an ABC classification for these 10 items. 2. A particular raw material is available to a company at three different prices, depending on the size of the order:
The cost to place an order is $40. Annual demand is 3,000 units. Holding (or carrying) cost is 25 percent of the material price. What is the economic order quantity to buy each time? 3. Sally’s Silk Screening produces specialty T-shirts that are primarily sold at special events. She is trying to decide how many to produce for an upcoming event. During the event, Sally can sell T-shirts for $20 apiece. However, when the event ends, any unsold T-shirts are sold for $4 apiece. It costs Sally $8 to make a specialty T-shirt. Sally’s estimate of demand is the Following:
a. What is the service rate (or optimal fractile)? b. How many T-shirts should she produce for the upcoming event? 4. Given the following information, formulate an inventory management system. The item is Demanded 50 weeks a year.
a. State the order quantity and reorder point. b. Determine the annual holding and order costs. c. If a price break of $50 per order was offered for purchase quantities of over 2,000, would you take advantage of it? How much would you save annually? 5. Jill’s Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. Widgets are ordered from a supplier who stops by every three weeks. Data for both products are as follows:
a. What is the inventory control system for
Develop an ABC classification for these 10 items. 2. A particular raw material is available to a company at three different prices, depending on the size of the order:
The cost to place an order is $40. Annual demand is 3,000 units. Holding (or carrying) cost is 25 percent of the material price. What is the economic order quantity to buy each time? 3. Sally’s Silk Screening produces specialty T-shirts that are primarily sold at special events. She is trying to decide how many to produce for an upcoming event. During the event, Sally can sell T-shirts for $20 apiece. However, when the event ends, any unsold T-shirts are sold for $4 apiece. It costs Sally $8 to make a specialty T-shirt. Sally’s estimate of demand is the Following:
a. What is the service rate (or optimal fractile)? b. How many T-shirts should she produce for the upcoming event? 4. Given the following information, formulate an inventory management system. The item is Demanded 50 weeks a year.
a. State the order quantity and reorder point. b. Determine the annual holding and order costs. c. If a price break of $50 per order was offered for purchase quantities of over 2,000, would you take advantage of it? How much would you save annually? 5. Jill’s Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. Widgets are ordered from a supplier who stops by every three weeks. Data for both products are as follows:
a. What is the inventory control system for