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Unformatted text preview: Practice Problems: Chapter 12, Inventory Management Problem 1: ABC Analysis Stock Number Annual $ Volume Percent of Annual $ Volume J24 12,500 46.2 R26 9,000 33.3 L02 3,200 11.8 M12 1,550 5.8 P33 620 2.3 T72 65 0.2 S67 53 0.2 Q47 32 0.1 V20 30 0.1 Σ = 100.0 What are the appropriate ABC groups of inventory items? Problem 2: A firm has 1,000 “A” items (which it counts every week, i.e., 5 days), 4,000 “B” items (counted every 40 days), and 8,000 “C” items (counted every 100 days). How many items should be counted per day? Problem 3: Assume you have a product with the following parameters: Demand = 360 Holding cost per year = $1.00 per unit Order cos : $100 t = per order What is the EOQ? Problem 4: Given the data from Problem 3, and assuming a 300-day work year; how many orders should be processed per year? What is the expected time between orders? Problem 5: What is the total cost for the inventory policy used in Problem 3? Problem 6: Assume that the demand was actually higher than estimated (i.e., 500 units instead of 360 units). What will be the actual annual total cost? Problem 7: If demand for an item is 3 units per day, and delivery lead-time is 15 days, what should we use for a re-order point? Problem 8: Assume that our firm produces type C fire extinguishers. We make 30,000 of these fire extinguishers per year. Each extinguisher requires one handle (assume a 300 day work year for daily usage rate purposes). Assume an annual carrying cost of $1.50 per handle; production setup daily usage rate purposes)....
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- Fall '05