3. Sarita Uribe opened a new beauty products retail store. There are numerous itemsin inventory, and Sarita knows that there are costs associated with inventory.However, her time is limited so she cannot carefully evaluate the inventory policyfor all products. Sarita wants to classify the items according to the dollars investedin them. The following table provides information about the 10 items that shecarries:ITEM NUMBERUNIT COST ($)DEMAND (UNITS)E1024800D238.1200D273700R021000R198200S1076.500S12311200U117800U2311500V7541500a) Use ABC analysis to classify these items into categories A, B, and C.b) Develop a cycle policy if class A items are to be reviewed every 20 days, Bitems every 60 days, and C items every 120 days.

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a) Use ABC analysis to classify these items into categories A, B, and C.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Question

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3. Sarita Uribe opened a new beauty products retail store. There are numerous items
in inventory, and Sarita knows that there are costs associated with inventory.
However, her time is limited so she cannot carefully evaluate the inventory policy
for all products. Sarita wants to classify the items according to the dollars invested
in them. The following table provides information about the 10 items that she
carries:
ITEM NUMBER
UNIT COST ($)
DEMAND (UNITS)
E102
4
800
D23
8.
1200
D27
3
700
R02
1000
R19
8
200
S107
6.
500
S123
1
1200
U11
7
800
U23
1
1500
V75
4
1500
a) Use ABC analysis to classify these items into categories A, B, and C.
b) Develop a cycle policy if class A items are to be reviewed every 20 days, B
items every 60 days, and C items every 120 days.

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