EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Chapter 12, Problem 12PA
Summary Introduction
Interpretation: Inventory Turnover and Average Inventory value needs to be calculated based on the given information.
Concept Introduction: Inventory turnover helps in finding how many numbers of times a company must purchase inventory over a specified period to sustain in the market.
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Southern Markets, Inc., is considering the use of ABC analysis to focus on the most critical SKUs in its inventory. Currently, there are approximately 20,000 different SKUs with a total dollar usage of $10,000,000 per year.a. What would you expect to be the number of SKUs and the total annual dollar usage for A items, B items, and C items at Southern Markets, Inc.?350 PART 2 Managing Customer Demandb. The following table provides a random sample of the unit values and annual demands of eight SKUs. Categorize these SKUs as A, B, and C items.SKU Code Unit Value Demand (Units)A104 $2.10 2,500D205 $2.50 30X104 $0.85 350U404 $0.25 250L205 $4.75 20S104…
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Per the textbook definition, the term bullwhip effect “Describes the distortions in a supply chain caused by changes in customer demand, resulting in large swings in inventory levels as the orders ripple upstream from the retailer to the distributor and manufacturer” (Wallace, 2020, p. 137). The term is derived from physics. When cracking a whip, someone just has to snap their wrist and it causes a wave like effect that increases with a chain reaction. The bullwhip effect is a term that was first used in the 1990s. The makers of Pampers had many changes in order volumes, when usually diapers were bought at a constant rate (The Bullwhip effect : History and solutions, 2021). This caused the company to receive hard hits in demand with each new order from the retailers. For example, during the Covid-19 pandemic, everyone was told to stay home, go to school from home, and work from home. This caused the need for many more computers and electronic…
Use the information below to answer the following question(s).
Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80
reams per week at $150 per ream. The vendor covers all shipping costs. Office
Supply House is not required to inspect the shipment upon entry. Office Supply
House earns 20% on its cash investments. The purchase order lead time is two
weeks. The following cost data are available:
Relevant ordering costs per
purchase order
$53.75
Relevant insurance, materials
handling, breakage, and so on,
per year
$4.25
How many deliveries will be required at the economic order quantity level?
42 deliveries
18 deliveries
52 deliveries
20 deliveries
37 deliveries
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