This Quiz: 70 pts possible 10 of 15 (0 complete) This Question: 10 pts L. Houts
ID: 330536 • Letter: T
Question
This Quiz: 70 pts possible 10 of 15 (0 complete) This Question: 10 pts L. Houts Plastics is a large manufacturer of injection-molded plastics in North Carolina. An investigation of the company's manufacturing facility in Charlotte yields the information presented in the table below. How would the plant classify these items according to an ABC classification system? (Round dollar volume to the nearest whole number and percentage of dollar volume to tivo decimal places) L. Houts Plastics Charlotte Inventory Levels Dollar Volume %Of Dollar Volume Value ltem Code Avg. Inventory (units) (s/unit) 1289 2347 2349 2363 2394 2395 6782 7844 8210 8310 9111 400 300 120 60 60 30 20 12 3.50 4.00 2.50 1.80 1.75 2.25 1.15 2.05 2.00 2.00 3.00 36.63 1,200 300 9.16 3.21 0.70 23 25 0.75 0.43 14 18 3,276 0.55 For the following three questions, consider only items 1289, 2349, and 8210 from the above table for relative classification (these are some of the items for which you computed the metrics) Enter your answer in each of the answer boxes.Explanation / Answer
Dollar volume of 1289 = 400 x 3.5 = 1400
Therefore, percentage of Dollar volume = 1400/ 3276 x 100 = 42.73 %
Dollar volume of 2363 = 60 x 1.80 = 108
Therefore, percentage of Dollar Volume = 108/3276 x 100 = 3.29 %
Dollar Volume of 2395 = 30 x 2.25 = 67.5
Therefore, percentage of dollar volume = 67.5 / 3276 x 100 = 2.06 %
Dollar volume of 8210 = 8 x 2 = 16
Therefore , percentage of dollar volume = 16 /3276 x 100 = 0.488%
We fix threshold limit for A-B-C- classification as per following :
All items ( in descending order of percentage of dollar volume ) cumulatively consisting 80% of total Dollar volume should be classified as A class item
All items ( in descending order of percentage of dollar volume ) barring A class items cumulatively consisting 90% of total Dollar volume should be classified as B class items
Rest of the items ( ie between 90 % and 100% in terms of cumulative value ) to be classified as C class items
Thus 1289 and 2347 cumulatively consists of = 42.73 % + 36.63 % = 79.36% of Dollar volume should be classified as A class items
Item 2349 having percentage of Dollar Volume of 9.16% should be classified as B class item
Together , they make = 79.36 % + 9.16% = 88.52% of total Dollar Volume. It is to be noted that if we add percentage of Dollar volume for 2363 to above, total percentage of Dollar volume = 88.52% + 3.29% = 91.81 %. Since this exceeds the threshold limit of 90% required to be classified as B class item, we cannot classify 2363 as B class item.
Therefore, all balance items to be classified as C class items including 2363
Item number 1289 should be classified as
A
Item number 2349 should be classified as
B
Item number 8210 should be classified as
C
Item number 1289 should be classified as
A
Item number 2349 should be classified as
B
Item number 8210 should be classified as
C
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