Running head: APPLICATION OF OPERATIONS MANAGEMENT TOOL 1

Sayma Fariha Tahsin

1072009

Application of operations management tools; a case study of a grocery shop in Bangladesh.

Army Institute of Business Administration, Sylhet.

APPLICATION OF OPERATIONS MANAGEMENT TOOL 2

Introduction

Source of data collection,

Shop Name – Labiba Store.

Location- Tilagor point, Sylhet.

Phone number- 01819711689

Date of data collection-

From 25th august to 14th October, 2022

From labiba store, the information we got is that there are 47 items in that grocery shop.

From the collecting data, we saw that the top selling product are rice, daal & oil, which we

got to know ABC Classification.

Literature review

ABC Classification

According to ABC Classification, we classify the overall inventory according to some

measure of importance and allocating control efforts accordingly. Typically we have 3

classes of inventory where A category products are considered to be very important, category

B is considered to be moderately important and C category is least important.

A items generally account for about 10 to 20 percent of the number of items in inventory but

about 60-70% of the annual dollar value. On the other hand, C items might account for about

50-60% of the number of items but only about 10-15% of the dollar value of an inventory.
APPLICATION OF OPERATIONS MANAGEMENT TOOL 3

Form our data collection, we can see that there are 12 items from A category which is nearly

20% of total inventory, 24 items for B category which is nearly 50% of total inventory and

last 11 items are consist of C category.

EOQ

EOQ refers to Economic Order Quantity. The order size that minimizes total annual cost is

EOQ. We know,

From our data collection, we get three A category products, rice, daal and oil for EOQ

calculation.

For rice, the EOQ is,

=
√ 2 AD
vr
, Holding cost(V)=
16000
68354.06
= 0.234 Ordering cost(A)=
68354.05
3862
=17.699

¿
√ 2∗17.699∗4∗12∗230 = 164.123
0.234∗62

For daal,

¿
√ 2∗17.699∗4∗12∗90 = 75.38
0.234∗115

For oil,

¿
√ 2∗117.699∗4∗12∗50 = 44.299
0.234∗185
APPLICATION OF OPERATIONS MANAGEMENT TOOL 4

Suggestions

From the analysis of collective data, we can suggest labiba store to put more focus on the top

three selling products, rice, daal and oil. Also, they can eliminate C category products to

reduce their overall cost of inventory.