IPE 483 ae, Assignment Submitted by! Saquib Bin Habib Studimt ID 15sf012 Date f Submission > 24/40] 2070 Scanned with CamScannerAssignment _ 4, What Is the EOQ ond what is the Louest total west Exploin. beegly . Ans FOQ is abbreviation fer Feenomic Order Q Economic Order Quoabh is We order quachhy a compony should purchase to mining ze inventory costs as holding costs, order costs and shoctag & eosts Concerned wth cost, we can warty the follow equation > Tela a Annual fnnund Prnuvod aura fee + ordering + troldng toy: test D ie ee aeariC -peres+ Zn Whee 6 2 total annie! cost De Pemond ponsee C= Cesk per unt Cermed The Ceenomic vsdes quanhy - €0Q 04 L = Selup coSt [oeLary tvst Re Recrdes print Hale pt) a He annual holding cost! iit Scanned with CamScannerHere DE is the annual pacha cost , Pog is the annul ordecies ost Q tig the annul pene tost Wo ordes b Economc Order quonh ty Qeot is the o¢ qer by ad whieh total Cost ts evinimum: The Lewest totok Lost ig minimal whure slope of the turve is ero. Vang coheulus ¢ eS ee ad Tc Ds en 2 0+ (aa 3 /ZDSe 2 Sigs {ru Mh Toph) os) — Q i eh [habey tsi | — pe [annual est | Rs [ordering ost] Qopt Osler Quamkly Site (CQ) So by &ffecenhahon, We get opharal codec quombhy [Get] at thick we ger the Lowest total enrt That is. If Qupp GWorkty is onder} Cost us Mee Louse st © Scanned with CamScanner—— om | 2 Bhat is the anneal coo of balding in-entory at — €OQ and the annual cost f ordering tnceestagy 4 the 0A] Explain thee Saynsprance: Ans $, Holding test, ace the aust for storage fadlhes handling, insucance, breakeye, deprecia hi tayes ond tor Opportunity cos} f copitheS: High holding costs tend to fovour low Taventory tends and Frequent replenishment : Dene tosh Cefer Ls the momagerial and’ cherie eos to Prepare the puxchax oP produchon ocdes: Ordering Costs trdude aU tu detetls, such Caps Trems and cohealahng order quanhhes . It also inckudes the tosts associated wrth neon teneng, the sytem needed to track orders - Annual eos} + holdeng Inventory is caleulated Finding te Sum produc} of the. inventory ab ayy stant & Gass Cost per unit. This ec . fu annual Oud “fh. i a ub The @innuad or dar‘eg ost Is found A mulk, ol number of order by Fixed cst s. Vasil annual ordency cost = xs: “de a Scanned with CamScanner3. How mul: ea Bes ‘total aa enertane Bf the F Store manages orders tuice as bird feeders — as the E0Q 7 How much the Port cost frecems@ if the stom monager orders half aS many bied feeders os the €0Q ? + 30 Ars We Know, oe Oat Dekh, seg for E04, (ra peg 2 ise ee + Pee ep > 206% 4 vu Foc Q-2) ; es ae St (rds ve + wee wr Subbracting (1) fom @), pie _ D Oy H- pe- D- fre], = ed, + D6 * pie ae Om oe Oort yo 2 | Lv - ‘ , on ae ; ~' | Scanned with CamScannerAlso -for a a O38 j ‘ ushi a [re | = 00 + D Soy, ett - tt % Qopt Lee Zz F . 2058 Out ae te] Pine a eH ) Sebtea ching CO) from (3), (rel, - re] Bip e +, + Qua H- DCs Di Qept 4 Qaor DS jet 2Qoph. tes, ra | Me Gee h ) = Goo Re aug eae Ci: (+) Fem (4) © (5), we See that, the difference OF the thal cost are the Same. thed is, the toll cost increavs by the Sam + if the store ree ordas trig or | 5 OS He E0Q ee» Scanned with CamScanner4. what happens to the EOQ and the toby wst than the demand is doubled 7 What happens to The £OQ and The tolal cost when unit price is doubled ? — Ars % We know, A os abs ie £0, Oent 7 pal ust, Te = pe + ° s+ &¥ when demand is) doubudy p= 2D, £00: (O.p) = SPs 2fe ee ie Trot is4) COQ inertayes by Zaps PQs of tore bow, te Stabp ga HPS HG iy NZ Goot 3 Jz Ds Qurr Ad Ps e nea 2D 4 a opt eQ=20 tohen unit pice is doublid, , £0Q, (Ger), iF oan That (sy EOQ hecrea vs by = a Scanned with CamScannerond, toh) oshte = Ye+— =ape + JEP Gert g Wer dee, the total east is the same for both TK cases. 5. What do you mean by ABC analysis ) Disuuss the Peackial Feplicahien of AGA analysis in any fachy opecahion. Aosi Ape analysis is a type of inmenboyy categorization method in wick inventory ts dwided into three categories + A,B and @ in descending value. A has the highest value items, B is lower value tran Ay onde Sates Bilocad “(ee live. ABC onalysis works by Beals Pp down the Poll ewing wars | A- items 15%, of all qos contribute t0 70-807 vf the annual consumption value of tha itenas B-items + 35% of all goods contribute bo 15-25 J, of toe annual Consumption value of he items C- items 5 0% of all goods Contribute tr only 5% of annual consump bon volue ct dhe items + Scanned with CamScannerABS Thvenlory Classification Cinventory value for ack Group versus the group's porhon of tre trtab usb) i‘! reentry A item a3) : | volne so yb : died B item cM I —— 4 a} ig ae a zo 40 60 0 loo Pere tage of thd lst gt differant shck ems ee ABC Tay Chas: fain . An A item may have a high sonchery volume throw) a combination of ether lar es} and. high usage or Weg cost an Loo usage : Similody, @ Hems may have o low mone tory volume because “+ aire bon derannee cost Ty an automobile Service station, gassing worlh bean A iHem with daily or weekly replencshments trees, batteries, oily @rense and transmiswen Fluid may be Bitens and ordered evety two h fouje Nee a Scanned with CamScannerems would consist of valve stems wind shield wiper blades, Caduate caps, fon belt, hoses, tar War ete. Thee tems may be ordered £veay two of thee months oF even be atlowed to cun cud vefore reorder because the penalty for stockout is not serious 6- What do you mean by Supplies Enventory and We tA Pecess inventory 9 Explain. irs ¢ Supplies Soventory are Supplies that have already been bought bat not yet consumed or used: Bulk office supplies whieh ae to be Used for the nee} ® months are examples *f Supples inventor Work tr Process inventory ace He materials Haat havetbebat pachally completed trough Hho production procecs, It fefers to the raw materalé neue and overhiad Costs inciecced for pcddiucts halle the produchon Process: | are at vanous s les leis a Corpencat Of the ineatory asses’ asset account | the balan sheet: Scanned with CamScannerF Whal tre the items trdluded fa Holding Cost & Ordering Cost ? Ans Holding Cost are costs remain unsold and are associgted with stovigg inventory, Tis a cernponent of total invercory usts, along woth on tae and Seeing wwsts- Hbidiie’ @ists inclade 5 1D Faulty storage > Labor D> Rererd Keepy BD Product dejewrerahen , spoilage, breakage: D) Peo e P S> Real, uhibhis . seler'ec 4 Q > seeurty @ insupanee’ Expenses incurced te cate and process ar ordes te a supplce ere Callecl ordeniag Gest: UH ts materials Ares reloded to the preparation of a supplerts dost ocdere Including the cost of acy an ordec, Prepany invoree, shipping: inspection Costs ete Ordering Costs include ¢ D Time ublred 42 find supplies © put orderc. D Transpectaton costs D> Inspection , unloading and trancfer costs: 4 Labor test te inspect the received f° Scanned with CamScannerG What ore he syificanee of Ke-order paint 2 Ans A teorder point is the mininun wit quan that a business Should have in available inventory before thy need te Ceocder mere product - The EPorpula a Waleulate Teorder point As Mthe Su0n tog time demand and safety steck in days Re dL tss , where J- average daily Le lead Hoe Se Safety shh Signa iconce 4 Ceogder point e 5 Manimize cost, 3 Biecag mote inventoly Is not a productive use of copital: Reorder points provide busin with greater Franeial Flexi bility by oblong tum te keep? mn yrotunt t Inventory on hand without running out Products» pte Sthckeouts $ Too Ute inventery can result steckouds Reorder points help prevent sbekouts “Better Foreeashag 4 Caleulahny Peocdecing pornt ag 4o calealate forecast demand more aeeurcately - hi Scanned with CamScannerPlacing orders at the Corder point Cnyeces that the ceplacement stoek arrives gust Ta time fo ee that no Stock out takes place. This also helps te aeid Unnecessary inventory holding Costs that may cesudt from placing orders too Karly thereby Cag inventory +r pile up 9. Explain the benchts of Tuo Bin System over One Bin System. Ans% A one-bin, inventory system is a Senp lL inventory contrd system tehich depends on replenishing aay, at fixed Hime Inkervals and not at a minimam stock Revel But ia fwo-bin inuentory system Hii Mantead plastie bins ace ublted alternately. bohen tems in the first bin have been depleted, an ocder is placed do tefl or replace them. The seeond bin is then Supposed to have enough tenes Molle eh Het onde BE HERES -RatLtA weer es Scanned with CamScannerOne- Bin System (Periods ¢) ee > Order Crough bp eefu bin Two-Bin System { - | ‘| > Order One Byre Of Trventor Fay Emap i 7 Benefits Ff Twe Bin System ares yo. D» T4 ensuces optimal owailabi ly of inventory. | > vat automates Stock eeplenishment D> Te mibgates the cise *F abeupt shortages i 12 TH allows The distribution of stock among the Shop floors and ware houses ef freiently. , >h helps encashirg instant sueges Tr demand: 7 je> Th gives adequate time for onlering replenish 7 1 Scanned with CamScanneryo. Why the wnt of holding test is Me/unit/ year? Explain: _Ans % Holding costs aie Mevaset aso cd atiet storing inventory that Cemains Unsold. This cost depends on the Unit ef preduet- The lughsr the Rumber Of Units, the higher the baer eos}. Also, to stoce the unsold products, a warehuse or ploee is required tohrdd fequices hoes ag Genecolly a place is femted for a Leng bee Uke yeng . So the holding cost depends on pee, ahs these Ceasens, the uni} of holding cost 14 Tk uni) yen Scanned with CamScanner