# week 3 assignment 052818

Using the appropriate tools and given information (e.g., formulas, Excel, etc.) complete the parts for the two problems below. The answers can be included in the same document as the calculations. APA formatting is not required.

3A – The following table contains figures on the monthly volume and unit costs for a random sample of 16 items from a list of 2,000 inventory items at a health care facility.

• Develop an A-B-C classification for these items.
 Item Unit Cost Usage Item Unit Cost Usage K34 \$10 200 F99 \$20 60 K35 25 600 D45 10 550 K36 36 150 D48 12 90 M10 16 25 D52 15 110 M20 20 80 D57 40 120 Z45 80 200 N08 30 40 F14 20 300 P05 16 500 F95 30 800 P09 10 30
• Given the monthly usages in the following table, classify the items in A, B, and C categories according to dollar usage.
 Item Usage Unit Cost 4021 90 \$1,400 9402 300 12 4066 30 700 6500 150 20 9280 10 1,020 4050 80 140 6850 2,000 10 3010 400 20 4400 5,000 5
• Determine the percentage of items in each category and the annual dollar value for each category for part B.

3B – A bakery buys flour in 25-pound bags. The bakery uses 1,215 bags per year. Ordering cost is \$10 per order. Annual carrying cost is \$75 per bag.

• Determine the economic order quantity.
• What is the average number of bags on hand?
• How many orders per year will there be?
• Compute the total cost of ordering and carrying flour.
• If holding costs were to increase by \$9 per year, how much would that affect the minimum total annual cost?