Inventory Management and Economic Order Quantity (EOQ) Analysis
Problem #12-1: ABC Inventory Analysis for the Welsh Corporation
The Welsh Corporation utilizes 10 key components in one of its manufacturing plants. The task is to perform an ABC analysis based on the provided data and explain the rationale behind the classification.
Data and Calculations
| SKU | Item Cost ($) | Annual Demand |
|---|---|---|
| WC219 | 0.10 | 12,000 |
| WC008 | 1.20 | 22,500 |
| WC916 | 3.20 | 700 |
| WC887 | 0.41 | 6,200 |
| WC397 | 5.00 | 17,300 |
| WC654 | 2.10 | 350 |
| WC007 | 0.90 | 225 |
| WC419 | 0.45 | 8,500 |
| WC971 | 7.50 | 2,950 |
| WC713 | 10.50 | 1,000 |
ABC Classification and Explanation
Based on the
Read MoreMultivariate Analysis of Variance (MANOVA)
MANOVA
NOTES
Using DVs in combination through MANOVA circumvents this high experimentwise error rate. Then ANOVA is used to identifymain source of these effects. Researcher is mainly interested inresults ofANOVA
MANOVA combines DVs in diff ways so as to maximizeseparation ofconditions specified by each comparison indesign. – designs including a within-subjects factor having more than 2 levels must meetsphericity assumption. However,most common within-subject factor in applied research is time
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REVISION QUESTIONS SELECTION
QUESTION 1
Jason, a 32-year-old physiotherapist earning $65,000 annually, seeks advice on purchasing an investment property for $400,000 with a $280,000 loan. He plans to reside in the property after six years. He has $120,000 in shares (current value $130,000, cost base $80,000) and anticipates the following property income and expenses:
Estimated Rental Income: $20,000
Estimated Expenses:
- Rates: $2,000
- Insurance: $600
- Loan Interest: $25,400
- Depreciation (fixtures and fittings)
Inventory Management: Costing Methods & Journal Entries
Perpetual Inventory System
The perpetual inventory system continuously updates inventory records to reflect purchases, sales, and returns.
Inventory Costing Methods
Gross Profit Method
Estimates the cost of goods sold based on the gross profit percentage and net sales.
Specific Identification
Tracks the cost of each individual item sold and remaining in inventory.
Weighted-Average Method
Calculates the average cost per unit and applies it to both cost of goods sold and ending inventory.
First-In, First-Out
Read MoreABC Inventory Analysis and Economic Order Quantity
Problem #12-1:
The Welsh Corporation uses 10 key components in one of its manufacturing plants. Perform an ABC analysis from the data shown below. Explain your decisions and logic.
SKU | Item Cost $ | Annual Demand |
WC219 | 0.10 | 12,000 |
WC008 | 1.20 | 22,500 |
WC916 | 3.20 | 700 |
WC887 | 0.41 | 6,200 |
WC397 | 5.00 | 17,300 |
WC654 | 2.10 | 350 |
WC007 | 0.90 | 225 |
WC419 | 0.45 | 8,500 |
WC971 | 7.50 | 2,950 |
WC713 | 10.50 | 1,000 |
Problem #12-2:
The following table contains figures on the monthly volume and unit costs for a random sample of 16 items from a list of 2,000 inventory items
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Probability of Events
Calculating Probability
- Define the experiment and observation process.
- List the sample space (SP).
- Assign probabilities to each outcome in the SP.
- Identify the outcomes within the event of interest.
- Sum the probabilities of those outcomes.
Set Operations
- Union (A u B): Occurs if either A, B, or both occur. Includes all outcomes in A or B or both.
- Intersection (A n B): Occurs if both A and B occur. Includes outcomes common to both A and B.
- Complement (A^c): Occurs if A does not occur.