In the past, Taylor Industries has used a fixed-time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEM NUMBER ANNUAL USAGE ANNUAL ITEM USAGE NUMBER 1 $ 1,700 11 $ 13,400 2 12,300 12 800 3 2,400 13 42,700 4 50,900 14 10,200 5 13,100 15 1,400 6 900 16 10,500 7 2,200 17 4,200 8 11,300 18 62,000 9 5,300 19 3,700 10 15,400 20 3,100 a. Classify each item in inventory using an ABC plan.

In the past, Taylor Industries has used a fixed-time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEM NUMBER ANNUAL USAGE ANNUAL ITEM USAGE NUMBER 1 $ 1,700 11 $ 13,400 2 12,300 12 800 3 2,400 13 42,700 4 50,900 14 10,200 5 13,100 15 1,400 6 900 16 10,500 7 2,200 17 4,200 8 11,300 18 62,000 9 5,300 19 3,700 10 15,400 20 3,100 a. Classify each item in inventory using an ABC plan.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER ANNUALUSAGE ITEMNUMBER ANNUALUSAGE 1 $1,900 11 $13,800 2 12,700 12 1,000 3 2,700 13 43,600 4 51,800 14 10,600 5 10,300 15 1,600 6 1,200 16 10,900 7 2,500 17 4,500 8 11,700 18 63,200 9 5,600 19 4,000 10 15,800 20 3,400 a. Classify each item in inventory using an ABC plan. item # Class (A, B, or C) 1 2 3 4 5 6 7 8 9 10
In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER ANNUALUSAGE ITEMNUMBER ANNUALUSAGE 1 $ 1,500 11 $ 13,000 2 12,000 12 600 3 2,200 13 42,000 4 50,000 14 9,900 5 9,600 15 1,200 6 750 16 10,200 7 2,000 17 4,000 8 11,000 18 61,000 9 800 19 3,500 10 15,000 20 2,900 a. Classify each item in inventory using an ABC plan
In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER Annual Usage Item Number 1 $ 2,100 11 $ 14,000 2 13,000 12 1,100 3 2,800 13 44,000 4 52,300 14 10,800 5 10,500 15 1,800 6 1,300 16 11,100 7 2,600 17 4,700 8 11,900 18 63,700 9 5,800 19 4,100 10 16,100 20 3,500 a. Classify each item in inventory using an ABC plan.
Petromax Enterprises uses a continuous review policy to manage the inventory for one of its SKUs. The following information is available on the item. The firm operates 50 weeks in a year. Demand = 90,000 units/year Ordering Cost = $60/Order Holding Cost = $3/Unit/Order Lead Time = 10 weeks Standard Deviation of Weekly Demand = 200 units Suppose due to some recent changes to the target service level, they have determined the reorder point to be 20,000. If the inventory position of this SKU is currently 19,600, how many units should they order? (Round your answer to the nearest whole number, if it has decimals. Input 0 if they should not order now.)
Alpha Products, Inc., is having a problem trying to control inventory. There is insufficient time to devote to all its items equally. The following is a sample of some items stocked, along with the annual usage of each item expressed in dollar volume. ITEM ANNUAL DOLLAR USAGE ITEM ANNUAL DOLLAR USAGE a S 30, 100 k S 1,700 b 27,000 120,000 c 93,000 m 111,000 d 1,400 n 3,000 e 1,800 o 500 f 30,000 p 114, 000 g 1,600 q 2,600 h 2,500 г 28,000 i 3, 200 s 2, 800 j 1,500 t 3, 100 a. Suggest a system for allocating control time? multiple choice ABC analysis Cycle counting b. Specify where each item from the list would be placed.
A local service station is open 7 days per week, 365 days per year. Sales of 10W40 grade premium oil average 20 cans per day. Inventory holding costs are $0.50 per can per year. Ordering costs are $10 per order. The lead time is two weeks. Backorders are not practical— the motorist drives away.a. Based on these data, choose the appropriate inventory model and calculate the economic order quantity and reorder point. Describe in a sentence how the plan would work. Hint: Assume demand is deterministic.b. The boss is concerned about this model because the demand really varies. The standarddeviation of demand was determined from a data sample to be 6.15 cans per day. Themanager wants a 99.5 percent service probability. Determine a new inventory planbased on this information and the data in part (a). Use Qopt from part (a).
In ABC inventory analysis, which of the following is FALSE for class A items? Select one: a. Class A items together make up a higher percentage of total inventory value ($) than either class B or class C items. b. Tighter control of class A items (than for class B or class C items) is appropriate. c. It is advisable to manage Class A items using an automated computer system. d. Class A items together make up smaller percentage of inventory items than class C items. e. Class A items individually may have any value ($): small, medium or high.
Custom Computers, Inc. assembles custom home computer systems. The heat sinks needed are bought for $12 each and are ordered in quantities of 1300 units. Annual demand is 5200 heat sinks, the annual inventory holding cost rate is $3 per unit, and the cost to place an order is estimated to be $50. Calculate the following: (a) Average inventory level (b) The number of orders placed per year (c) The total annual inventory holding cost (d) The total annual ordering cost (e) The total annual cost
William Beville's Computer Training School in Richmond stocks notebooks for sale and would like to reduce its inventory cost by determining the optimal number of notebooks to order in each order. The ordering cost for each order is $27. The annual demand is 19455 units. The annual cost of holding each unit is $6. Each notebook costs $12. The school has a year of 250 working days. When a new order of notebooks is made, the supplier takes 4 days to deliver it. Show your work. 1. What inventory management model should we use to solve this problem? Model Economic Quantity to Order Model for discount purchases Model Economic Quantity to Produce Model to handle dependent demand 2. What is the optimal number of notebooks to make in each order? Response 3. What is the annual ordering cost (AOC)? Response 4. What is the Annual Holding Cost (AHC)? Response 5. What is the annual product cost (APC)? Response 6. What is the annual total cost of managing inventory (ATC) Answer 7. What would be the…
The demand for a commodity is 40,000 units a year, at a steady rate. It costs $20 to place an order, and $0.40 to hold a unit for a year. Find the order size to minimize inventory costs, the number of orders placed each year, the length of the inventory cycle and the total costs of holding inventory for the year. What is the EOQ? What is the number of orders placed each year? What is the inventory cycle (length of time that the the order size will last)? in terms of weeks What is the total ordering & carrying costs at the EOQ level?
Sam's Pet Hotel operates 52 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.00 per bag. The following information is available about these bags: ≻Demand=75 bags/week ≻Order cost=$55.00/order ≻Annual holding cost=25 percent of cost ≻Desired cycle-service level=80 percent ≻Lead time=4 weeks (24 working days) ≻Standard deviation of weekly demand=15 bags ≻Current on-hand inventory is 320 bags, with no open orders or backorders. Part 2 a. Suppose that the weekly demand forecast of 75 bags is incorrect and actual demand averages only 50 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $enter your response here higher owing to the error in EOQ. (Enter your response rounded to two decimal places.) a. What is the EOQ? What would the average time between orders (in weeks)? b. What should R be? c. An inventory withdraw…
Helen needs 1159 kgs of chicken per day on average to make enchiladas for her store. The supplier charges a $67 delivery fee per order (which is independent of the order size) and $3.90 per kg. Helen’s annual holding cost is 20%. Assume 52 weeks per year and 7 days per week. If Helen wants to minimize inventory holding and ordering costs, how much chicken should she purchase with each order (in kgs)? Provide your answer as an integer value.Use Econimic Order Quantity formula. The answer is 8,513. Not sure how to get there.