week 3 assignment 052818

Using the appropriate tools and given information (e.g., formulas, Excel, etc.) complete the parts for the two problems below. The answers can be included in the same document as the calculations. APA formatting is not required.

3A – The following table contains figures on the monthly volume and unit costs for a random sample of 16 items from a list of 2,000 inventory items at a health care facility.

  • Develop an A-B-C classification for these items.

Item

Unit Cost

Usage

Item

Unit Cost

Usage

K34

$10

200

F99

$20

60

K35

25

600

D45

10

550

K36

36

150

D48

12

90

M10

16

25

D52

15

110

M20

20

80

D57

40

120

Z45

80

200

N08

30

40

F14

20

300

P05

16

500

F95

30

800

P09

10

30

  • Given the monthly usages in the following table, classify the items in A, B, and C categories according to dollar usage.

Item

Usage

Unit Cost

4021

90

$1,400

9402

300

12

4066

30

700

6500

150

20

9280

10

1,020

4050

80

140

6850

2,000

10

3010

400

20

4400

5,000

5

  • Determine the percentage of items in each category and the annual dollar value for each category for part B.

3B – A bakery buys flour in 25-pound bags. The bakery uses 1,215 bags per year. Ordering cost is $10 per order. Annual carrying cost is $75 per bag.

  • Determine the economic order quantity.
  • What is the average number of bags on hand?
  • How many orders per year will there be?
  • Compute the total cost of ordering and carrying flour.
  • If holding costs were to increase by $9 per year, how much would that affect the minimum total annual cost?

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