Problem 1

Item a
A-B-C Classification:
A: Item 6
B: Item 1 and 2
C: Items 3, 4, 5, and 7

Item b
EOQ 180 units

Item c
EPQ 600 units

Problem 2
Item a
A-B-C Classification:
A: Items F95, Z45 and K35
B: Items P05, F14, D45, K36 and D57
C: Items K34, D52, M20, F99, N08, D48, M10 and P09

Item b
A-B-C Classification:
A: Item 4021
B: Items 4400, 4066 and 6850
C: Items 4050, 9280, 3010, 9402 and 6500

Item c

Percentage of
Annual Value (per Percentage of
Group group) Items
A 55.26% 11.11%
B 28.95% 33.33%
C 15.79% 55.56%

Problem 3
Item a EOQ 18 bags
Item b Average Inv. 9 bags
Item c Orders/year 67.5 orders/year
Item d Total Cost $ 1,350.00
Item e Change in Cost $ 78.71
Given
Item Unit Cost Annual Volume
1 $ 100.00 2,500.00
2 $ 80.00 3,000.00
3 $ 15.00 6,000.00
4 $ 50.00 1,000.00
5 $ 11.00 7,000.00
6 $ 60.00 8,500.00
7 $ 10.00 6,000.00

Item a: The A-B-C classification is in accordance with the percentage of annual value and percentage of items as foll

Item Unit Cost Annual Volume Annual Dollar Value

1 $ 100.00 2,500.00 $ 250,000.00
2 $ 80.00 3,000.00 $ 240,000.00
3 $ 15.00 6,000.00 $ 90,000.00
4 $ 50.00 1,000.00 $ 50,000.00
5 $ 11.00 7,000.00 $ 77,000.00
6 $ 60.00 8,500.00 $ 510,000.00
7 $ 10.00 6,000.00 $ 60,000.00
Total 34,000.00 $ 1,277,000.00

Percentage of Percentage of Annual

Item Annual Value A-B-C Classification Value (per group)
6 39.94% A 39.94%
1 19.58% B
38.37%
2 18.79% B
3 7.05% C
5 6.03% C
21.69%
7 4.70% C
4 3.92% C

A-B-C Classification:
A: Item 6
B: Item 1 and 2
C: Items 3, 4, 5, and 7

Item b
Given
Demand 4,500.00
Ordering Cost $ 36.00
Carrying Cost $ 10.00
EOQ = √((2(𝐷)(𝑆))/𝐻)

EOQ 180.00 units

Item c
Demand 18,000.00
Ordering Cost $ 100.00
Carrying Cost $ 40.00
Production/day 120.00
Use/day 90.00

EPQ = √((2(𝐷)(𝑆))/𝐻) √(𝑝/(𝑝−𝑢))

EPQ 600.00 units

al value and percentage of items as follows:
Percentage of Annual
Value
19.58%
18.79%
7.05%
3.92%
6.03%
39.94%
4.70%

Percentage of items
14.29%
28.57%

57.14%
Item a
Given
Percentage of Dollar
Item Unit Cost Usage Annual Dollar Value Value
K34 $ 10.00 200.00 $ 2,000.00 2.12%
K35 $ 25.00 600.00 $ 15,000.00 15.94%
K36 $ 36.00 150.00 $ 5,400.00 5.74%
M10 $ 16.00 25.00 $ 400.00 0.42%
M20 $ 20.00 80.00 $ 1,600.00 1.70%
Z45 $ 80.00 200.00 $ 16,000.00 17.00%
F14 $ 20.00 300.00 $ 6,000.00 6.37%
F95 $ 30.00 800.00 $ 24,000.00 25.50%
F99 $ 20.00 60.00 $ 1,200.00 1.27%
D45 $ 10.00 550.00 $ 5,500.00 5.84%
D48 $ 12.00 90.00 $ 1,080.00 1.15%
D52 $ 15.00 110.00 $ 1,650.00 1.75%
D57 $ 40.00 120.00 $ 4,800.00 5.10%
N08 $ 30.00 40.00 $ 1,200.00 1.27%
P05 $ 16.00 500.00 $ 8,000.00 8.50%
P09 $ 10.00 30.00 $ 300.00 0.32%
Total $ 94,130.00

Percentage of
Item Percentage of A-B-C Classification Annual Value (per Percentage of Items
Dollar Value
group)
F95 25.50% A
Z45 17.00% A 58.43% 18.75%
K35 15.94% A
P05 8.50% B
F14 6.37% B
D45 5.84% B 31.55% 31.25%
K36 5.74% B
D57 5.10% B
K34 2.12% C
D52 1.75% C
M20 1.70% C
F99 1.27% C
10.02% 50.00%
N08 1.27% C
D48 1.15% C
M10 0.42% C
P09 0.32% C
A-B-C Classification:
A: Items F95, Z45 and K35
B: Items P05, F14, D45, K36 and D57
C: Items K34, D52, M20, F99, N08, D48, M10 and P09

Item b
Given:
Percentage of Dollar
Item Usage Unit Cost Annual Dollar Value Value
4021 90.00 $ 1,400.00 $ 126,000.00 55.26%
9402 300.00 $ 12.00 $ 3,600.00 1.58%
4066 30.00 $ 700.00 $ 21,000.00 9.21%
6500 150.00 $ 20.00 $ 3,000.00 1.32%
9280 10.00 $ 1,020.00 $ 10,200.00 4.47%
4050 80.00 $ 140.00 $ 11,200.00 4.91%
6850 2,000.00 $ 10.00 $ 20,000.00 8.77%
3010 400.00 $ 20.00 $ 8,000.00 3.51%
4400 5,000.00 $ 5.00 $ 25,000.00 10.96%
Total $ 228,000.00

Percentage of
Annual Value (per Percentage of Items
Percentage of group)
Item Dollar Value A-B-C Classification
4021 55.26% A 55.26% 11.11%
4400 10.96% B
4066 9.21% B 28.95% 33%
6850 8.77% B
4050 4.91% C
9280 4.47% C
3010 3.51% C 15.79% 56%
9402 1.58% C
6500 1.32% C

A-B-C Classification:
A: Item 4021
B: Items 4400, 4066 and 6850
C: Items 4050, 9280, 3010, 9402 and 6500

Item c
Percentage of
Annual Value Percentage of Items
(per group)
Group
A 55.26% 11.11%
B 28.95% 33%
C 15.79% 56%
Given
Demand 1,215.00
Ordering Cost $ 10.00
Carrying Cost $ 75.00

Item a
EOQ = √((2(𝐷)(𝑆))/𝐻)

EOQ 18.00 bags

Item b
Average Inv. (EOQ/2) 9.00

Item c
Demand 1,215.00
EOQ 18.00
Orders/year 67.50

Item d Ordering Carrying

Cost per bag $ 10.00 $ 75.00
Multiplier 67.50 9.00
Cost $ 675.00 $ 675.00

Total Cost $ 1,350.00

Item e
EOQ = √((2(𝐷)(𝑆))/𝐻)

Revised EOQ 17.01 bags

Average Inv. 8.50420064
Orders/yr 71.44

Ordering Carrying
Cost per bag $ 10.00 $ 84.00
Multiplier 71.44 8.50
Cost $ 714.35 $ 714.35

Total Cost $ 1,428.71

Change in Annual Cost $ 78.71