Fortnex is a company that assembles small household appliances including coffee makers, toasters, and food mixers. The parent company of Fortnex has been concerned about the rising product cost of the finished products, which has led to reduced profit margins. One of the demands of the parent company has been to review the inventory management practices of Fortnex. Two areas which Fortnex is currently investigating are economic order quantity EOQ and ABC analysis. Perform the following. (i) At present the company purchases copper wire for a certain appliance under economic order quantities based on the information given in Table 3-1. The supplier of copper wire is proposing a discount of 5% of unit price if Fortnex purchases in lot sizes of 1000 kg. rather than the calculated EOQ. Determine if Fortnex should take advantage of the price discount. Justify your response. For a particular series of referenced products, the number of units used a year, and the unit cost are as shown in Table 3-2. Develop an ABC analysis and plot a Pareto chart to help Fortnex company to which items to give maximum and least attention. (ii)
Fortnex is a company that assembles small household appliances including coffee makers, toasters, and food mixers. The parent company of Fortnex has been concerned about the rising product cost of the finished products, which has led to reduced profit margins. One of the demands of the parent company has been to review the inventory management practices of Fortnex. Two areas which Fortnex is currently investigating are economic order quantity EOQ and ABC analysis. Perform the following. (i) At present the company purchases copper wire for a certain appliance under economic order quantities based on the information given in Table 3-1. The supplier of copper wire is proposing a discount of 5% of unit price if Fortnex purchases in lot sizes of 1000 kg. rather than the calculated EOQ. Determine if Fortnex should take advantage of the price discount. Justify your response. For a particular series of referenced products, the number of units used a year, and the unit cost are as shown in Table 3-2. Develop an ABC analysis and plot a Pareto chart to help Fortnex company to which items to give maximum and least attention. (ii)
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.1SC: Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing...
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