Tecnológico de Monterrey

Dra. Ileana Castillo

Solución a problemas de clasificación ABC

4. Davis Steel Distributors is planning to set up an additional warehouse in its distribution

network. Analysis of item-sales data in its other warehouses shows that 25% of the items
represent 75% of the sales volume. The company also has an inventory policy that
varies with the items in the warehouse. That is, the first 20% of the items are the A items
and are to be stocked with turnover ratio of 8. The next 30% of the items, or B items, are
to have turnover ratio of 6. The remaining C items are to have a turnover ratio of 4. There
are to be 20 products held at the warehouse with sales forecasted to be $2,6 million
annually. What dollar value of the average inventory would you estimate for the
warehouse?

First of all, we compute the A, given by the formula:

A= 0.125

Then, we compute the values for Y, X and the projected items sales, in order to obtain
the Average Inventory:
 Cumulative Cumulative Projected Item Turnover Average
Item No.
Item Proportion Sales (Y) Sales Ratio Inventory
1 (X) 0.05 $ 835,714.29 $ 835,714.29 8
2 0.1 $ 1,300,000.00 $ 464,285.71 8
3 0.15 $ 1,595,454.55 $ 295,454.55 8
4 0.2 $ 1,800,000.00 $ 204,545.45 8
$ 1,800,000.00 $ 225,000.00
5 0.25 $ 1,950,000.00 $ 150,000.00 6
6 0.3 $ 2,064,705.88 $ 114,705.88 6
7 0.35 $ 2,155,263.16 $ 90,557.28 6
8 0.4 $ 2,228,571.43 $ 73,308.27 6
9 0.45 $ 2,289,130.43 $ 60,559.01 6
10 0.5 $ 2,340,000.00 $ 50,869.57 6
$ 540,000.00 $ 90,000.00
11 0.55 $ 2,383,333.33 $ 43,333.33 4
12 0.6 $ 2,420,689.66 $ 37,356.32 4
13 0.65 $ 2,453,225.81 $ 32,536.15 4
14 0.7 $ 2,481,818.18 $ 28,592.38 4
15 0.75 $ 2,507,142.86 $ 25,324.68 4
16 0.8 $ 2,529,729.73 $ 22,586.87 4
17 0.85 $ 2,550,000.00 $ 20,270.27 4
18 0.9 $ 2,568,292.68 $ 18,292.68 4
19 0.95 $ 2,584,883.72 $ 16,591.04 4
20 1 $ 2,600,000.00 $ 15,116.28 4
$ 260,000.00 $ 65,000.00
$ 380,000.00

Therefore, our Average Inventory value would be $380,000.00.

5. An analysis of the product line items in the retail stores of the Save-More Drug chain
shows that 20% of the items stocked account for 65% of the dollar sales. A typical store
carries 5,000 items. The items accounting for the top 75% of the sales are replenished
from warehouse stocks. The remainders are shipped directly to stores from
manufacturers or jobbers. How many items are represented by the top 75% of sales?

A= 0.155

Given that A is constant, we obtain X from the following formula:

 X= 0.28703

From the equation above, we obtain that 28.7% of the items represent the top 75% of
sales; therefore, the number of items that represent 75% of sales is 1435.