Describe the inventory problems and policies


Assignment:

Your manager asks you to perform ABC Analysis to increase the efficiency of your company. He provides following data related to hits and total profit for each item; then asks an analysis based on combination of hits and total profit. Perform ABC Analysis for your company with A items = top 55%, B items = next 30%, C items are the remaining ones. Manager believes that profit made from a product is three times more important hits of the product. (Assume , , and )

ITEM

Hits

Total Profit

1

13

360

2

30

575

3

5

1400

4

7

725

5

67

520

6

105

450

7

10

1500

8

15

350

9

36

800

10

16

125

4. Explain reasons for a company to keep inventory

5. Describe the following inventory problems and policies briefly ?

a. Newsvendor Problem

b. Continuous Review Inventory Policy

c. Periodic Review Inventory Policy

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Financial Management: Describe the inventory problems and policies
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