Professional Documents
Culture Documents
Inventory
Michael Iosua
MBA 530, Dr. Foster
Class of 2009
Items to be covered
1.
2.
3.
4.
5.
6.
7.
8.
9.
Brainstorming Exercise
Which items contribute most to your
dollar volume?
What is your inventory control method?
How much inventory is wasted due to
lack of inventory control?
Sam-Mart Produce
Department
Pounds Sold
Cost/lb
60
4.00
1000
1.00
Bananas
500
.75
Tomatoes
1000
2.00
Lettuce
Totals
100
$ Value
Pounds Sold
Cost/lb
$ Value
650
4.50
2925.00
Lettuce
1950
.50
975.00
Bananas
2500
.60
1500.00
Tomatoes
900
.90
810.00
6210.00
Totals
6000
Product
$ Value
Mangoes
2925
Bananas
1500
Lettuce
975
Tomatoes
810
6210
Totals
% of $
Cum %
of $
value
Cum %
of units
Class
Product
$ Value
Mangoes
2925
47.1%
Bananas
1500
24.2%
Lettuce
975
15.7%
Tomatoes
810
13.0%
6210
100.0%
Totals
% of $
Cum %
of $
value
Cum %
of units
Class
Cum %
of units
Product
$ Value
Mangoes
2925
47.1%
47.1%
10.8%
Bananas
1500
24.2%
71.3%
52.5%
Lettuce
975
15.7%
87.0%
85.0%
Tomatoes
810
13.0%
100.0%
100.0%
6210
100.0%
Totals
% of $
Cum %
of $
value
Class
Cum %
of units
Product
$ Value
Mangoes
2925
47.1%
47.1%
10.8%
Bananas
1500
24.2%
71.3%
52.5%
Lettuce
975
15.7%
87.0%
85.0%
Tomatoes
810
13.0%
100.0%
100.0%
6210
100.0%
Totals
% of $
Cum %
of $
value
Class
Earnhardt Auto-Mart
Product
Items sold
$ Value
Water Pump
10
150
Timing belt
10
50
Oil filter
50
15
Oil quart
100
Totals
170
Summary
Priority on high dollar volume
items
Tighter control of priority items
Not an all purpose method
Holds to Pareto rule
Further Readings
Bhattacharya, Arijit; Sarkar, Bijan; Mukherjee, Sanat.
(2007). Distance-based consensus method for ABC
analysis. International Journal of Production Research,
45(15), pp. 3405-21. Retrieved from Business Source
Premier.
Partovi, Fariborz; Hopton, Walter. THE ANALYTIC
HIERARCHY PROCESS APPLIED TO TWO TYPES OF
INVENTORY PROBLEMS. Production & Inventory
Management Journal, 35(1), pp. 13-20. Retrieved from
Business Source Premier.
Appendix
References
Fuerst, William J. SMALL BUSINESSES GET A NEW
LOOK AT ABC ANALYSIS FOR INVENTORY
CONTROL. Journal of Small Business Management,
45(15), pp. 39-44. Retrieved from Business Source
Premier.
Caldwell, Bruce D. The Benefits of ABC Analysis for
Inventory Reduction. The Connecticut Association of
Purchasing Management, Inc. Retrieved November 20,
2007, from http://www.capminc.org/abcanalysis.htm
Earnhardt Auto-Mart
Product
Items sold
$ Value
Water Pump
10
150
Timing belt
10
50
Oil filter
50
15
Oil quart
100
Totals
170
Items sold
$ Value
Water Pump
10
150
1500
Timing belt
10
50
500
Oil filter
50
15
750
Oil quart
100
300
Totals
170
3050
Product
$ Value
Water
pump
1500
Oil filter
750
Timing
belt
500
Oil quart $
300
3050
Totals
% of $
Cum %
of $
value
Cum %
of units
Class
Product
$ Value
Water
pump
1500
49.2%
Oil filter
750
24.6%
Timing
belt
500
16.4%
Oil quart $
300
9.8%
3050
100.0%
Totals
% of $
Cum %
of $
value
Cum %
of units
Class
Cum %
of units
Product
$ Value
Water
pump
1500
49.2%
49.2%
5.9%
Oil filter
750
24.6%
73.8%
35.3%
Timing
belt
500
16.4%
90.2%
41.2%
Oil quart $
300
9.8%
100.0%
100.0%
3050
100.0%
Totals
% of $
Cum %
of $
value
Class
Cum %
of units
Product
$ Value
Water
pump
1500
49.2%
49.2%
5.9%
Oil filter
750
24.6%
73.8%
35.3%
Timing
belt
500
16.4%
90.2%
41.2%
Oil quart $
300
9.8%
100.0%
100.0%
3050
100.0%
Totals
% of $
Cum %
of $
value
Class