DSC tutorial 5

1a.


Item
Unit
cost
Usage
Total
Value

K34 10 200 2000

K35 25 600 15000

K36 36 150 5400

M10 16 25 400

M20 20 80 1600

Z45 80 250 20000

F14 20 300 6000

F95 30 800 24000

F99 20 60 1200

D45 10 550 5500

D48 12 90 1080

D52 15 110 1650

D57 40 120 4800

N08 30 40 1200

P05 16 500 8000

P09 10 30 300
Total

390 3905 98130

Item
Unit
cost
Usage
Total
Value
% of
overall
value
% of
overall
quantity
%
cumulative
of quantity
Grading

F95 30 800 24000 24.5 20.5 20.5 A 20.5
Z45 80 250 20000 20.4 6.4 26.9 B
21.8
K35 25 600 15000 15.3 15.4 42.3 B
P05 16 500 8000 8.2 12.8 55.1 C
57.7
F14 20 300 6000 6.1 7.7 62.7 C
D45 10 550 5500 5.6 14.1 76.8 C
K36 36 150 5400 5.5 3.8 80.7 C
D57 40 120 4800 4.9 3.1 83.7 C
K34 10 200 2000 2.0 5.1 88.9 C
D52 15 110 1650 1.7 2.8 91.7 C
M20 20 80 1600 1.6 2.0 93.7 C
N08 30 40 1200 1.2 1.0 94.8 C
F99 20 60 1200 1.2 1.5 96.3 C
D48 12 90 1080 1.1 2.3 98.6 C
M10 16 25 400 0.4 0.6 99.2 C
P09 10 30 300 0.3 0.8 100.0 C

390 3905 98130


b.
He would know which items are more important and therefore put more emphasis on them e.g
accountability, technology, inventory and maintenance.
c.
High profit margin associated with P05
Highly restricted item (saves lives)
Closely associated with top item (complementary)
Vital equipment needed for daily operations at health care center e.g bottle neck process item
2a
Demand = 750 claypots per month
Cost of each pot = $2 per pot
S Ordering cost = $20
H holding cost = $0.6 per year
At optimal Q,
0.6Q/2 = 9000/Q(20)
Therefore Q = 775
Holding cost = 0.6*775/2 =
Order cost = $232
Total =
When Q = 1500
Holding cost = 0.6*750 =
Order cost = 6*20 = $120
Total =
Additional annual cost =
2b.
Easier to account for smaller inventory
Perishable goods/ obsolute
Lost of sales and customers if inventory is not enough
3.
Since there are no delivery charges, amount of inventory to hold only depends on the cost of
operating the humidity control room. Therefore the order rate should be equal to the usage rate,
hence we should order 50 every day to minimise inventory holding cost. The batches order will be
for the next day since LT = 1 day.