Task 1 - Inventory Management & Control Frank's Fasteners a leading company based in UK, which makes industrial fasteners has the following average annual inventory level, as given in Table T1a. To have a more proper control over the inventory the company needs to do A-B-C analysis based on the annual consumption value. Annual Annual Number Cost () per Consumption Item of Units Sold Unit Value () Machine screw 19.000 0.60 11,400.00 Cable clamp 11,000 0.35 3,850.00 Eyebolt 13,000 1.40 18,200.00 Tape measure 46,000 3.50 161,000.00 Nail 16,000 0.90 14,400.00 Carabiner 40,000 1.90 76,000.00 Wing nut 84,000 0.04 3,360.00 Flat washer 110,000 0.07 7,700.00 Shook 12,000 0.35 4,200.00 Ferrule 10,000 1.50 15,000.00 Table T1a - Average Annual Inventory a. Perform A-B-C classification of the inventory and classify the items based on 70-20-10 rule. (10 Marks) b. Prepare a Pareto Chart with the above information. (05 Marks) C. Suggest what type of stocking policy could be adopted for each class of inventory. Justify your answer with sufficient explanation. (05 Marks) d. The ordering costs and the carrying costs of the three classes of inventory are given in Table T1b. Calculate the annual cost of stock of Frank's Fasteners, if the company follows EOQ for ordering the items. Class B Ordering Costs per Carrying Costs (C) Order (S) in 2.00 10% of Item Cost/Year 1.50 12% of Item Cost/Year 1.00 15% of Item Cost/Year Table T1b - Inventory Costs (10 Marks) [Total marks 30 Task 1 - Inventory Management & Control Frank's Fasteners a leading company based in UK, which makes industrial fasteners has the following average annual inventory level, as given in Table T1a. To have a more proper control over the inventory the company needs to do A-B-C analysis based on the annual consumption value. Annual Annual Number Cost () per Consumption Item of Units Sold Unit Value () Machine screw 19.000 0.60 11,400.00 Cable clamp 11,000 0.35 3,850.00 Eyebolt 13,000 1.40 18,200.00 Tape measure 46,000 3.50 161,000.00 Nail 16,000 0.90 14,400.00 Carabiner 40,000 1.90 76,000.00 Wing nut 84,000 0.04 3,360.00 Flat washer 110,000 0.07 7,700.00 Shook 12,000 0.35 4,200.00 Ferrule 10,000 1.50 15,000.00 Table T1a - Average Annual Inventory a. Perform A-B-C classification of the inventory and classify the items based on 70-20-10 rule. (10 Marks) b. Prepare a Pareto Chart with the above information. (05 Marks) C. Suggest what type of stocking policy could be adopted for each class of inventory. Justify your answer with sufficient explanation. (05 Marks) d. The ordering costs and the carrying costs of the three classes of inventory are given in Table T1b. Calculate the annual cost of stock of Frank's Fasteners, if the company follows EOQ for ordering the items. Class B Ordering Costs per Carrying Costs (C) Order (S) in 2.00 10% of Item Cost/Year 1.50 12% of Item Cost/Year 1.00 15% of Item Cost/Year Table T1b - Inventory Costs (10 Marks) [Total marks 30
