Practice exercise reorder point A company FFF has a principal activity of selling and manufacturing tables and chairs. The company wants to determine the policy of supplying the wood material. The manufacture of one table needs approximately 20 kg of woods while for a chair needs approximately 4 kg of woods. This raw material is considered the principal used raw material in the manufacturing process and is frequently consumed. Part 1 1) What is the class type (A or B or C) of the wood material in this company by using the ABC classification method? Explain why. 2) What type of reorder point method do you advise the warehouse managers of this company to adopt for the supply of the wood material? Part 2 The sales of the company during the last 12 weeks of chairs and tables are as in the following: Week 8-12 Weck t-11 Week 1-10 Week 1-9 Week - Week t-7 Week 1-6 Week t-s Week 1-4 Week 1-3 Week 1-2 Week t-1 Sales of chairs Sales of Tables (unit) (unit) 180 40 190 50 200 55 300 60 260 80 200 45 220 35 320 65 220 S5 280 60 350 70 220 45 The company has made a convention with the supplier of woods which will be able to deliver this material within one week. Considering this new lead time, try to respond the following questions. 1) Determine the fixed quantity of woods that is ordered to the supplier. 2) Determine the reorder point of the wood material by considering a variable demand during the last 12 weeks. 3) Determine the safety stock that can be considered to protect the company from the fluctuation of demand. 4) Determine the maximum quantity of this material by considering Maximum Quantity = Quantity ordered to the supplier + Material for 1 week + Safety Stock 5) Determine the minimum quantity to be considered for the wood material to avoid any out of stock. Minimum Quantity= Average weekly Demand * LeadTime 6) Do you think the company has benefited from this convention with the supplier? Explain. 1