1-What is the purpose of the ABC classification system? 2- What is the relationship of the...
1-What is the purpose of the ABC classification system?
2- What is the relationship of the economic order quantity to demand? To the holding cost? To the setup cost?
3-Explain why it is not necessary to include product cost (price or price times quantity) in the EOQ model, but the quantity discount model requires this information.
Homework Answers
1.
ABC approach to inventory management is nothing but the system for inventory control that is used in materials and distribution management
The ABC classification that categorize items into three categories: -
A - Items that are critical to business
B - Items that are important at an average level.
C - Items that are not important.
The purpose of ABC analysis is that it helps the purchasing manager to segregate the inventory in three groups and manage it effectively. This ensures that different inventory management techniques can be applied to different inventory segment in order to maximize revenue and decrease costs.
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1-What is the purpose of the ABC classification
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2- What is the relationship of the...
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Q.2 The Kenneth State organization sells a product for which the annual demand is 5000 units....
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Distinguish between fixed order quantity and fixed time period system and give an example of each. Explain the ABC inventory classification system and indicate its advantages. Please include source
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