Your Tasks
Read the “Supplies4Medics” Case Study in Slack, et al Chapter 9, pp. 339 – 341, then answer the questions below. A template spreadsheet is available for you to carry out this exercise. The spreadsheet is table 9.10 from the case study – just to save you re-typing it.
Questions
1. Prepare a spreadsheet-based ABC analysis of usage value.
Classify as follows:
A items: top 20 per cent of usage value
B items: next 30 per cent of usage value
C items: remaining 50 per cent of usage value
You will need to plot cumulative usage value against the percentage of the sample represented by that cumulative usage value. Note that you are working with a sample of 20 inventory items, and so each item in the sample represents 5% of the total.
2. Calculate the inventory weeks for each item, for each classification, and for all the items in total. Does this suggest that the Operations Manager’s estimate of inventory weeks is correct? If so, what is your estimate of the overall inventory at the end of the base year, and how much might that have increased during the year?
In case you are unfamiliar with the term, “Inventory weeks”, it is the number of weeks of inventory, at current consumption rates, that we hold right now. You have last year’s sales for each item, and you have the current stock levels, so you can work this figure out quite easily.
3. Based on the sample, analyse the underlying causes of the availability problem described in the text.
Upload Requirement
Your answers should take the form of a spreadsheet with a little supporting text for question 3.
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