Question: 1. Johnson Widgets Inc. is examining its inventory of maintenance supplies in its warehouse. It wants to conduct an ABC analysis of these supplies. It maintains inventory of 10 parts and the history of part usage is contained in the following table.
What would you recommend to Johnson Widgets?
2. Foods Galore is a major distributor to restaurants and other institutional food users.
a. Foods Galore buys cereal from a manufacturer for $20.00 per case. Annual demand for cereal is 200,000 cases, and the company believes that the demand is constant at 800 cases per day for each of the 250 days per year that it is open for business. Average lead time from the supplier for replenishment orders is eight days, and the company believes that it is also constant. The purchasing agent at Foods Galore believes that annual inventory carrying cost is 10 percent and that it costs $40.00 to prepare, send, and receive an order. How many cases of cereal should Foods Galore order each time it places an order? What will be the average inventory? What will be the inventory turnover rate?