Question
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,
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 table below).
Sales Data (One-Year Period) | |||
Product # | Units Sold | Price Per Unit | Profit Per Unit |
SR101 | 14,500 | #250 | $50.50 |
SR103 | 750 | 2,000 | 330.00 |
SR105 | 1,600 | 600 | 270.00 |
SR201 | 30 | 2,250 | 877.50 |
SR203 | 10 | 3,000 | 1,750.00 |
SR205 | 9,250 | 500 | 125.00 |
SR301 | 1000 | 650 | 195.00 |
SR303 | 550 | 700 | 196.00 |
SR305 | 3,000 | 920 | 100.00 |
SR500 | 100 | 1,100 | 440.00 |
Note that these values vary from those given in text.
Ms. Semerod needs professional advice concerning the appropriate criteria to use in the classification of their inventory, as well as in developing appropriate cutoff levels for each class of inventory (A, B, and C). To solve this dilemma, Ms. Semerod has contracted the service of your logistics consulting firm to perform the inventory analysis.
In particular, MAC Corporation has hired your firm to classify their inventory in two ways: by revenue, and by profit. For each, they have asked you to rank their products from most important to least important, then identify which products fall within each of the three categories. For each criteria, present a table of calculations, then explain your calculation approach.
Conclude your analysis by making a recommendation to Ms. Semerod as to which of the two inventory classification criteria would be the best to use by MAQ, and explain your reasons for your recommendation.
Ms. Semerod will be expecting your report in the form of an executive memo, due to her office by March 18, 2018.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started