# Stuff and Stuff

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Stock Number Annual \$ Volue J24 12,500 R26 9,000 L02 3,200 M12 1,550 P33 620 T72 65 S67 53 Q47 32 V20 30 What are the appropriate ABC groups of inventory items? (4 points) Stock Number Annual \$ Volume % of Annual Volume % of Total Class: J24 12,500 46.21 79.48 A R26 9,000 33.27 L02 3,200 11.83 19.85 B M12 1,550 5.73 P33 620 2.29 T72 65 0.24 0.67 C S67 53 0.20 Q47 32 0.12 V20 30 0.11 Total Annual Volume 27,050 Problem 2: Assume you have a product with the following parameters: Holding cost per per unit Order per order What is the EOQ? What is the total cost for the inventory policy used? (4 points) Problem 3: 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 cost of \$150, and a daily production rate of 300. What is the optimal production order quantity? (4 points) Problem 4: We need 1,000 electric drills per year. The ordering cost for these is \$100 per order and the carrying cost is assumed to be 40% of the per unit cost. In orders of less than 120, drills cost \$78; for orders of 120 or more, the cost drops to \$50 per unit. Should we take advantage of the quantity discount? (4 points) Problem 5: George Heinrich uses 1,500 per year of a certain subassembly that has an annual holding cost of \$45 per unit. Each order placed costs George \$150. He operates 300 days per year and has found that an order must be placed with his supplier 6 working days before he can expect to receive that order. For this subassembly, find: a) Economic order quantity. b) Annual holding cost. c) Annual ordering cost. d) Reorder point. (4 points) Problem 6: A process that is