1

A Item U.C Annual Vol Annual $ Vol % sum of %

6 60 85 5100 39.94% 39.94%
1 100 25 2500 19.58% 59.51%
2 80 30 2400 18.79% 78.31%
3 15 60 900 7.05% 85.36%
5 11 70 770 6.03% 91.39%
7 10 60 600 4.70% 96.08%
4 50 10 500 3.92% 100.00%
340.00 12,770.00 100.00%

B
EOQ=√(2*4500*36/10
EOQ=180

C
EPQ = √(2*18,000 *100/40 √120/(120-90)
EPQ = 600

A Item Unit cost Usage Value CV % of total

F95 30 800 24,000 24,000 25.50%
Z45 80 200 16,000 40,000 42.50%
K35 25 600 15,000 55,000 58.40%
P05 16 500 8,000 63,000 66.90%
F14 20 300 6,000 69,000 73.30%
D45 10 550 5,500 74,500 79.10%
K36 36 150 5,400 79,900 84.90%
D57 40 120 4,800 84,700 90.00%
K34 10 200 2,000 86,700 92.10%
D52 15 110 1,650 88,350 93.90%
M20 20 80 1,600 89,950 95.60%
F99 20 60 1,200 91,150 96.80%
N08 30 40 1,200 92,350 98.10%
D48 12 90 1,080 93,430 99.30%
M10 16 25 400 93,830 99.70%
P09 10 30 300 94,130 100.00%
Total 3,855 94,130

B
 Item Unit cost Usage Value CV & of total
4021 1,400 90 126,000 126,000 55.30%
4400 5 5,000 25,000 151,000 66.20%
4066 700 30 21,000 172,000 75.40%
6850 10 2,000 20,000 192,000 84.20%
4050 140 80 11,200 203,200 89.10%
9280 1,020 10 10,200 213,400 93.60%
3010 20 400 8,000 221,400 97.10%
9402 12 300 3,600 225,000 98.70%
6500 20 150 3,000 228,000 100.00%
Total 8,060 228,000

4
TC = Q /2 * H + D/Q * S

D = 40/day x 260 days/yr. = 10,400 packages

S = $60 H = $30

a. Qo = √ 2DS/H = √ 2(10400)(60)/30 = 203.96 = 204 boxes

b. TC= (Q/2)* H + (D/Q)*s

204/2 *30 + 10400/204 * 60 = 3060 + 3058.82 = $6118.82

c. Yes

d. TC200 = 200/2 (30) + 10400/200 (60)

TC200 = 3,000 + 3,120 = $6,120

6,120

difference is $1.18 higher than with EOQ so 200 is acceptable

 3
Classification
A A
A Q = √ (291215)(10)/75
A Q= 18 bags
B B
B 1215/18 67.5 orders
C C (18/2)*75+(1215/18)*10
C TC = 1350
D
H = 84 per bag

Q = √ 2(1215)
(10)/84
Q= 17 bags
TC= ((17/2)(84)) + ((1215/17)(10))
TC + 1428
Difference = 1428 - 1350
increase of $78

ABC
classification
A
A
A
A
B
B
B
C
C
C
C
C
C
C
C
C
ABC
classification
A Annual
A Category % of items Dollar Value
A A 64% 2,064,000
B B 26% 374,400
B C 11% 297,600
C
C
C
C

A
Current cost = Annual carrying costs + Annual ordering costs

Current cost = [(Quantity / 2) x Carrying cost] + [(Annual demand / Curr

Current cost = [(1500 / 2) x $0.60] + [(9000 / 1500) x $20]

Current cost = $450 + $120

Current cost = $570

Q = SQRT [(2 x D x Co) / Cc]

Q = SQRT [(2 x 9000 x $20) / $0.60]

Q = 774.60 or 775 (Rounding off to the nearest whole number)

Optimal Order Quantity (Q) = 775 units

New cost = Annual carrying costs + Annual ordering costs

New cost = [(Q / 2) x Carrying cost] + [(Annual demand / Q) x Ordering

New cost = [(775 / 2) x $0.60] + [(9000 / 775) x $20]

 New cost = $232.5 + $232.26

New cost = $464.76

B
Storage space = (Optimal order quantity / Current Order quantity) x 100

Storage space = (775 / 1500) x 100

Storage space = 51.67% / 52%

Optimal Order quantity yiel shows that around 52% of the storage space would
l ordering costs Additional annual cost at the current order size is calculate

+ [(Annual demand / Current Quantity) x Ordering cost] Additional annual cost = Current cost - New cost

1500) x $20] Additional annual cost = $570 - $464.76

Additional annual cost = $105.24

t whole number)

dering costs

al demand / Q) x Ordering cost]

 ent Order quantity) x 100

% of the storage space would be required

rrent order size is calculated as,

nt cost - New cost