INVENTORY MANAGEMENT ASSIGNMENT

Material Title: Assignment Questions

Question 1

NANSAK Trading maker of super-fast DRAM chips, has organized its 10 inventory items on an annual cost-volume basis. Table below shows the items (identified by item number and part number), their annual demands, and unit costs. How should the company classify these items? into groups A, B, and C?  use spread sheet to answer this question.

Item N umber	Part Number Annual	Volume (units)	Unit Cost(GHc)
Item 1	1036	100	8.5
Item 2	1307	1,200	0.42
Item 3	10286	1,000	90
Item 4	10500	1,000	12.5
Item 5	10572	250	0.6
Item 6	10867	350	42.86
Item 7	11526	500	154
Item 8	12572	600	14.17
Item 9	12760	1,550	17
Item 10	14075	2,000	0.6

1. Using the Parato Principles, Classify the items into A, B and C 

• Discuss the applications of ABC analysis in various management areas.

Question 2

1. . Briefly explain the characteristics of ‘A’ category inventory items under ABC analysis.

B. Discuss the Pareto principle on the basis of which ABC classification technique is developed. – 7 Marks

Question 3

Suppose you are the inventory manager of a firm dealing in dairy products. what would be your priority objectives of managing the inventory of dairy products and the factors that will underpin you inventory policies.