Business Logistics Problems
1) A company decides to establish an EOQ for an item. The annual sales volume (demand) is 200,000 units, each costing $4, ordering costs are $8 per order, and inventory carrying costs are 20%. Calculate the following:
a) The EOQ in units b) Number of orders per year c) Cost of ordering, cost of carrying inventory, and total cost.
2) Given the following information with demand and performance cycle certainty:
Average daily demand = 40 units Performance cycle = 10 days Order quantity (from (EOQ) = 400 units Review period = 2 weeks (10 working days)
Calculate: a) the reorder point utilizing the perpetual review method b) the reorder point utilizing the periodic review method
3) Consider the following network structure:
Assume that it is appropriate to keep 100 inventory units at the plant warehouse. Show ALL work to determine: a) the common days supply. b) the amount allocated to each warehouse using the Fair Share Allocation method.
4) Analyze the following data to produce an ABC classification based on annual sales:
|
Product ID
|
Annual Sales in (000s)
|
% Total Sales
|
Accumulated Sales (%)
|
Products (%)
|
Classification Category
|
|
1
|
1,000
|
|
|
|
|
|
2
|
9,000
|
|
|
|
|
|
3
|
70,000
|
|
|
|
|
|
4
|
3,250
|
|
|
|
|
|
5
|
500
|
|
|
|
|
|
6
|
1,500
|
|
|
|
|
|
7
|
50,000
|
|
|
|
|
|
8
|
750
|
|
|
|
|
|
9
|
6,000
|
|
|
|
|
|
10
|
8,000
|
|
|
|
|
Determine: a) total annual product sales b) complete calculations for each column c) rank product ID in order based on high-volume to low-volume (sales) products d) develop ABC classification.