P3.A manufacturing company that produces furniture stocks frequently demanded re
ID: 447323 • Letter: P
Question
P3.A manufacturing company that produces furniture stocks frequently demanded replacementparts for furniture that is ordered frequently. These parts range from simple chair spindles tocomplete hideaway bed mechanisms for sleeper sofas. In the table below is a selected list of theitems kept in the warehouse.
item monthly volume item value
u-343-12-xw 500 $4.00
u-343-12-xt 675 $6.00
u-343-12-t 500 $15.00
u-256-27-l 50 $20.00
u-234-23-l 700 $6.00
48t-ch 15 $20.00
44l-23-p 100 $20.00
38-23-ch 500 $8.00
36t-ok 245 $250.00
34-t-ok- 100 $350.00
34-p-ok- 150 $30.00
344-36t-ok 100 $4.00
343-36t-ok 7 $100.00
32x48ct-ok 150 $9.00
122-34-t-ok 75 $175.00
.(4 pts) Can you suggest which items might be A items? Bs? Cs?b.
(1pts) What implications would your analysis have on how the warehouse is managed?
Explanation / Answer
A)
B) With this classification, warehouse management will become straemlined, with each item recieveing the treatment corresponding to its class.
the item listed as A-items needs to have tight inventory control, more secured storage areas and better sales forecasts, frequent reorders, with weekly or even daily reorder; as avoiding stock-outs on A-items is a priority.
the B item get the privilage of being in between A and C item, the B items need monitoring efforts less than A items, but more than C items, with reordering frequency higher than C items but lower than A items.
Reordering C-items is made less frequently; a typically inventory policy for C-items consist of having only 1 unit on hand, and of reordering only when an actual purchase is made; this approach leads to stock-out situation after each purchase which can be an acceptable situation, as the C-items present both low demand and higher risk of excessive inventory costs.
Hence, with this ananlysis in mind, the A items will get more attention, and items in C category wont need that much effort, hence, it will save effort and time of the warehouse management, and help them concentrate their time and resources on the monitoring the items that are critical.
No. item monthly volume item value Monthly Usage Usage % Cumulative Usage % Cum. % of no of items Class 1 36t-ok 245 250 61250 43.32% 43.32% 7% A 2 34-t-ok- 100 350 35000 24.76% 68.08% 13% A 3 122-34-t-ok 75 175 13125 9.28% 77.37% 20% B 4 u-343-12-t 500 15 7500 5.31% 82.67% 27% B 5 34-p-ok- 150 30 4500 3.18% 85.85% 33% B 6 u-234-23-l 700 6 4200 2.97% 88.82% 40% B 7 u-343-12-xt 675 6 4050 2.86% 91.69% 47% B 8 38-23-ch 500 8 4000 2.83% 94.52% 53% B 9 u-343-12-xw 500 4 2000 1.41% 95.93% 60% B 10 44l-23-p 100 20 2000 1.41% 97.35% 67% B 11 32x48ct-ok 150 9 1350 0.95% 98.30% 73% C 12 u-256-27-l 50 20 1000 0.71% 99.01% 80% C 13 343-36t-ok 7 100 700 0.50% 99.50% 87% C 14 344-36t-ok 100 4 400 0.28% 99.79% 93% C 15 48t-ch 15 20 300 0.21% 100.00% 100% C 141375 100.00% (Note: Monthly Usage = Monthly volume * item value) ABC Thumbrule After fininding the monthly usage, sort the table in descending order of monthly usage A: 10-20%of item with 60-70% of value B: Intermediate Usage % = (item Monthly usage/ total monthly usage)*100 C: 50-60% of items with 10-20% value for cumulative usage % add the usage % of the item with the sum of a previous usage % Cum. % of no of items =(1/15)*100 for item 1 Cum. % of no of items =(2/15)*100 for item 2 Cum. % of no of items =(3/15)*100 for item 3 and so on…Related Questions
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