Assignment #1 Case 9.1 on page 353 of the Supply Chain Management textbook

MAQ Corporation, a major producer of consumer electronics equipment, is currently faced with a rapidly growing product line and its associated inventory problems. MAQs president, Mary Semerod, has decided to initiate a program to analyze the companys inventory requirements utilizing different inventory techniques. The first phase of this program consists of an ABC analysis of the companys product line (shown in the following table). Ms. Semerod has encountered difficulties in deciding on the appropriate criteria to use in the classification and in developing appropriate cutoff levels for each class of inventory. To solve her dilemma, Ms. Semerod has contracted the services of a logistics consulting firm to perform the inventory analysis.

Answer the following questions, with each question < 150 words. Please be precise (to the point) and concise (for easy reading).

Question2. What would the cutoff levels be? Be sure to provide explanations of the reasoning supporting your decisions.

SALES DATA (ONE-YEAR PERIOD)

PRODUCT# UNITS SOLD PRICE PER UNIT PROFIT PER UNIT

SR101 15,000 $250 $50.50

SR103 750 1,500 330.00

SR105 1,600 600 90.00

SR201 45 2,250 877.50

SR203 10 3,500 1,750.00

SR205 9,250 500 125.00

SR301 700 650 195.00

SR303 550 700 196.00

SR305 3,000 920 303.60

SR500 100 1,100 440.00