Question

1)

I)

The manager of a furniture manufacturing plant hopes to achieve a better allocation of inventory control efforts by adopting an ABC approach to inventory control. Given the monthly usages listed below, classify the items in A, B, and C categories according to dollar usage.

	Annual Usage	Unit Cost
Item Type	in thousands	in Dollars
Item 1	10	$2.50
Item 2	30	$1.25
Item 3	20	$16.00
Item 4	10	$0.75
Item 5	20	$3.00
Item 6	33	$2.50
Item 7	60	$14.25
Item 8	22	$10.00
Item 9	100	$2.75
Item 10	500	$4.25

Using the above data, Item 6 will be classified as:

• A) A item
• B) B item
• C) C item
• D)  None of the above

ii) Can you show the formulas and steps for this question
:

A project network is given by the following table. The minimum time required to complete the project is:

Activity	Immediate Predecessors	Activity Time
A	-	5 days
B	A	9 days
C	A	8 days
D	B, C	7 days
E	C	4 days
F	E	3 days
G	D, F	3 days

• A.) 23 days
• B.) 24 days
• C) 25 days
• D.)39 days
• E.) none of the above

Answer 1

i) C) C item

Perform the following operations

Annual Usage in Dollars = Annual Usage in thousands * Unit cost in dollars

Sort the items in descending order of Annual Usage in Dollars

Annual Dollar Usage % of Total = Annual Usage in Dollars / Total

Cumulative % = Running SUM of Annual Dollar Usage % of Total

Item Type	Annual Usage in thousands	Unit Cost in Dollars	Annual Usage in Dollars (1000)	Annual Dollar Usage % of Total	Cumulative %
Item 10	500	4.25	2125	53.0%	53.0%
Item 7	60	14.25	855	21.3%	74.4%
Item 3	20	16	320	8.0%	82.3%
Item 9	100	2.75	275	6.9%	89.2%
Item 8	22	10	220	5.5%	94.7%
Item 6	33	2.5	82.5	2.1%	96.8%
Item 5	20	3	60	1.5%	98.3%
Item 2	30	1.25	37.5	0.9%	99.2%
Item 1	10	2.5	25	0.6%	99.8%
Item 4	10	0.75	7.5	0.2%	100.0%
		Total	4007.5

Items comprising the last 5% of Total Annual Dollar Usage are classified as C. Item 6 is in the last 5%, hence classified as C item

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ii) B) 24 days

List alternative paths in the network and their duration. Duration of each path is equal to the sum of activity times on that path.

Path	Duration
A-B-D-G	5+9+7+3 = 24
A-C-D-G	5+8+7+3 = 23
A-C-E-F-G	5+8+4+3+3 = 23

Path of longest duration is the critical path.

Critical path is A-B-D-G

Minimum time required to complete the project is equal to the time of the critical path, which is 24 days