• Category A items are valued at €455 on average
• Category B items are valued at €180 on average
• Category C items are valued at €45 on average
The analysis also revealed which of these items could be labelled with the above three categories:
• Category A car parts or components – 75 items
• Category B car parts or components – 325 items
• Category C car parts or components – 2750 items
The analysis also suggested new production and timing patters for the stock management tea. Instead of producing and stock items on a weekly basis, the following table was proposed to improve both stock management and cash flow, as follows:
• Category A – Reorder point every 2 weeks
• Category B – Reorder point every 4 weeks
• Category C – Reorder point every 6 weeks
Calculate the ABC of the Geely car part items being sent to the UK storage, using the data given, and calculate:
a) what is the cost (€) and
b) quantity stock requirements using a general re-stocking strategy every 4 weeks,
Also calculate :
c) what is the cost (€) and
d) quantity stock requirements using an ABC analysis over a 4 week average period.
e) What conclusions can be made from the results above?
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