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10 Practice Problems 1

This document contains practice problems for inventory control models using ABC analysis. It provides annual demand and price data for 16 inventory items. The problems involve performing ABC analysis to categorize the items, drawing an exchange curve, and calculating order quantities, number of orders, and total value of orders using an economic order quantity model.

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Johannes Rebuyos
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1K views

10 Practice Problems 1

This document contains practice problems for inventory control models using ABC analysis. It provides annual demand and price data for 16 inventory items. The problems involve performing ABC analysis to categorize the items, drawing an exchange curve, and calculating order quantities, number of orders, and total value of orders using an economic order quantity model.

Uploaded by

Johannes Rebuyos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BM2020

PRACTICE PROBLEMS FOR SELECTIVE INVENTORY CONTROL MODELS


1. The table below shows data for 16 items managed by an inventory manager. Perform ABC analysis to
categorize these items into A, B, and C classes.
Annual Annual
Item name Price Item name Price
demand demand
Item 1 3.5 30,000 Item 9 2.5 6,500
Item 2 12 1,500 Item 10 15 1,250
Item 3 3.5 4,500 Item 11 5 2,500
Item 4 15 200 Item 12 2 30
Item 5 6.5 24,000 Item 13 8 12
Item 6 4 500 Item 14 5.5 12
Item 7 0.2 12,000 Item 15 11 12,000
Item 8 7.5 1,100 Item 16 1.5 7,000

Annual Annual usage Proportion of Cumulative Inventory


Item name Price
Demand value Usage Value Proportion Class
Item 1 3.5 30,000 105,000 21% 21% A
Item 2 12 1,500 18,000 4% 25% B
Item 3 3.5 4,500 15,750 3% 28% B
Item 4 15 200 3,000 1% 28% C
Item 5 6.5 24,000 156,000 31% 59% A
Item 6 4 500 2,000 0% 60% C
Item 7 0.2 12,000 2,400 0% 60% C
Item 8 7.5 1,100 8,250 2% 62% C
Item 9 2.5 6,500 16,250 3% 65% B
Item 10 15 1,250 18,750 4% 69% B
Item 11 5 2,500 12,500 2% 71% B
Item 12 2 30 60 0% 72% C
Item 13 8 12 96 0% 72% C
Item 14 5.5 12 66 0% 72% C
Item 15 11 12,000 132,000 26% 98% A
Item 16 1.5 7,000 10,500 2% 100% C
TOTAL     500,622      

2. Draw an exchange curve for the first problem.


Orders Total value
Item name Cj Dj Co/i Q
Per Year of Items
Item 1 3.5 30,000 266.67 1142.9 26 2,000
Item 2 12 1,500 266.67 74.5 20 447
Item 3 3.5 4,500 266.67 442.6 10 775
Item 4 15 200 266.67 21.8 9 163
Item 5 6.5 24,000 266.67 550.4 44 1,789
Item 6 4 500 266.67 129.1 4 258
Item 7 0.2 12,000 266.67 12649.2 1 1,265
Item 8 7.5 1,100 266.67 102.1 11 383
Item 9 2.5 6,500 266.67 744.8 9 931
Item 10 15 1,250 266.67 54.4 23 408
Item 11 5 2,500 266.67 230.9 11 577
Item 12 2 30 266.67 63.2 0 63
Item 13 8 12 266.67 10.0 1 40
Item 14 5.5 12 266.67 14.5 1 40
Item 15 11 12,000 266.67 230.0 52 1,265
Item 16 1.5 7,000 266.67 1288.1 5 966
TOTAL     228 11,371

References
Shenoy, D., & Rosas, R. (2018). Problems & Solutions in Inventory Management. Cham: Springer International
Publishing AG.

10 Practice Problems 1 *Property of STI


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