EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Chapter 11, Problem 3PA
Summary Introduction
Interpretation:
Performance of the ABC analysis and explanation with respect to decisions and ideas.
Concept Introduction:
ABC analysis is nothing but the inventory categorization in which the inventory is divided into three categories A, B, and C in descending order. Category A contains the highest value, category B contains the values lower than the category a but the higher the category C, and category C contain the lowest values.
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Suppose this information is available for PepsiCo, Inc. for 2015, 2016, and 2017.
(in millions)
2015
2016
2017
Beginning inventory
$ 2,100
$ 2,400
$ 2,300
Ending inventory
2,400
2,300
2,700
Cost of goods sold
18,227
20,071
20,478
Sales revenue
39,145
42,957
44,066
Calculate the days in inventory for PepsiCo, Inc. for 2015, 2016, and 2017. (Round days in inventory to 1 decimal place, e.g. 5.1.)
2015
2016
2017
Days in inventory
days
We have seen the importance of demand forecasting affecting supply chain decisions in many ways. How does the reliability of demand forecasting affect a model to place warehouses for customers? Knowing that there is no specific answer that is always appropriate, how good (measured in percent close) do forecasts have to be in order to be used for network modeling?
Determine an A-B-C classification for these items:
Which items are A, B, and C - explain how you derive the answers? Use a table or excel spreadsheet to illustrate your work.
Item Unit Cost Annual Volume (000)1 300 252 90 303 30 604 50 105 15 706 100 407 10 60
Hint:Determine the Annual Dollar Value (Unit Cost * Annual Volume) for each item and the sum of the individual Annual Dollar Values. Arrange the items in descending order based on Annual Dollar Values. Then, determine the percentage of items and the percentage of…
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