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The Global Manager for Operations as Cadbury Schweppes has requested you to perform an ABC analysis on the following set of products. (8 marks) Item

The Global Manager for Operations as Cadbury Schweppes has requested you to perform an ABC analysis on the following set of products. (8 marks) Item Annual Demand Unit Cost A211 800 R9 B390 100 R90 C003 450 R6 D100 400 R100 E707 85 R2,000 F660 250 R320 G473 500 R75 H921 100 R75 4.2 The soft goods department for Cadbury Schweppes sells 175 units per month of a certain large bath towel. The unit cost of a towel to the manufacturer is R2.50 and the cost of placing an order has been estimated to be R12.00. The organization uses an inventory carrying charge of 27% of the unit cost per year. Determine the optimal order quantity, the order frequency, and the annual holding and setup cost. (6 marks) 4.3 If, through automation of the purchasing process, the ordering cost can be cut to R4.00, what will be the new economic order quantity, the order frequency, and annual holding and setup costs? Explain these results. (6 marks)

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