12.2.

)
A.) ABC Analysis
Data Results - sorted by dollar volume

Dollar Dollar
Volume Dollar Volume
Rank Item Unit Cost Volume volume Rank
3 A2 50 3000 ### 1
6 B8 12 4000 ### 2
4 C7 45 1500 ### 3
5 D1 10 6000 ### 4
7 E9 20 1000 ### 5
2 F3 500 500 ### 6
1 G2 1500 300 ### 7
10 H2 20 600 ### 8
8 I5 10 1750 ### 9
9 J8 5 2500 ### 10

B.) This ABC analysis provides Boreki Enterprises with the products that are their top revenue producers.
It shows them what products they should be valuing most on a priority list and which classes should have different
inventory policies associated with them.

C.) A2 can be added to the A classification because over 75% of the dollar volume is produced by 3 items.

12.13.) InventorEconomic Order Quantity Model

Enter
Enter the
the data
data in
in
Inventory: Cost vs Quanti
the
the shaded area
shaded area
250

Data 200
Demand ra 2500
Setup/orde 18.75 150
Holding co 1.5 (fixed amount)
Cost ($)

Unit Price, 0 100

Results 50
Optimal Or 250
Maximum I 250 0
Average I 125 50 .67 .33 100 .67 .33 150 .67 .33 200 .67 .33 250 .67 .3
Number of 10 6 6 83 6 3
11 13
6 3
16 18
6 3
2 1 23
6 3
2 6 28
Order Quantity (Q)

Setup cost Holding cost

 0
50 .67 .33 100 .67 .33 150 .67 .33 200 .67 .33 250 .67 .3
6 6 83 6 3
11 13
6 3
16 18
6 3
2 1 23
6 3
2 6 28
Order Quantity (Q)
Holding c $187.50
Setup cos $187.50
Setup cost Holding cost
Unit costs $0.00
Total cost, $375.00

COST TABStart at 62.5 Increment 20.83333

Q Setup costHolding coTotal cost

62.5 750 46.875 796.88
83.33333 562.5 62.5 625.00
104.1667 450 78.125 528.13
125 375 93.75 468.75
145.8333 321.4286 109.375 430.80
166.6667 281.25 125 406.25
187.5 250 140.625 390.63
208.3333 225 156.25 381.25
229.1667 204.5455 171.875 376.42
250 187.5 187.5 375.00
270.8333 173.0769 203.125 376.20
291.6667 160.7143 218.75 379.46
312.5 150 234.375 384.38
333.3333 140.625 250 390.63
354.1667 132.3529 265.625 397.98
375 125 281.25 406.25
395.8333 118.4211 296.875 415.30
416.6667 112.5 312.5 425.00
437.5 107.1429 328.125 435.27
458.3333 102.2727 343.75 446.02
479.1667 97.82609 359.375 457.20
500 93.75 375 468.75
520.8333 90 390.625 480.63
541.6667 86.53846 406.25 492.79

A.) Q*= 250 units

B.) Average inventory is 125 units
Annual inventory holding cost is $187.50

C.) 2500 units/ 250 orders = 10 orders per year

10 orders x $18.75 = $187.50 annual order cost

D.) TC=$187.50+$187.50= $375.00

 E.) 250 days/ 10 orders = 25 days between orders

F.) 2500 units / 250 days = 10 units remaining of available

inventory is the reorder point

12.23.) Q$20= sqrt(2*D*S/IP)

D 20,000 632.46
I 0.2 H=IP
S $40 Q$18*= 666.67
P $20 <500
$18 500 to 999 Q$17= 685.99
$17 >1000

A.) TC(Q18)=HQ/2+SD/Q+ ### per year

TC(Q17)=HQ/2+SD/Q+ $342,500 per year

B.) 1000 tires should be ordered each time

 Results - sorted by dollar volume

Cum
Percent of Percent of
Dollar Dollar
Item Volume Unit Cost Dollar Volume Volume Volume Category
G2 1500 300 $ 450,000.00 41.38% 41.38% A
F3 500 500 $ 250,000.00 22.99% 64.37% A
A2 50 3000 $ 150,000.00 13.79% 78.16% B
C7 45 1500 $ 67,500.00 06.21% 84.37% B
D1 10 6000 $ 60,000.00 05.52% 89.89% B
B8 12 4000 $ 48,000.00 04.41% 94.30% C
E9 20 1000 $ 20,000.00 01.84% 96.14% C
I5 10 1750 $ 17,500.00 01.61% 97.75% C
J8 5 2500 $ 12,500.00 01.15% 98.90% C
H2 20 600 $ 12,000.00 01.10% 100.00% C
Total $ 1,087,500.00
p revenue producers.
which classes should have different

produced by 3 items.

Inventory: Cost vs Quantity

3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3
.3 15 6.6 3.3 20 6.6 3.3 25 6.6 3.3 30 6.6 3.3 35 6.6 3.3 40 6.6 3.3
16 18 2 1 23 2 6 28 31 3 3 36 3 8 4 1 43
Order Quantity (Q)

Setup cost Holding cost Total cost

 3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3
.3 15 6.6 3.3 20 6.6 3.3 25 6.6 3.3 30 6.6 3.3 35 6.6 3.3 40 6.6 3.3
16 18 2 1 23 2 6 28 31 3 3 36 3 8 4 1 43
Order Quantity (Q)

Setup cost Holding cost Total cost