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3. Fortnex is a company that assembles small household appliances including coffee makers, toasters, and food mixers. The parent company of Fortnex has been concerned about the rising product cost of the finished products, which has led to reduced profit margins. One of the demands of the parent company has been to review the inventory management practices of Fortnex. Two areas which Fortnex is currently investigating are economic order quantity EOQ and ABC analysis. Perform the following. (i) At present the company purchases copper wire for a certain appliance under economic order quantities based on the information given in Table 3-1. The supplier of copper wire is proposing a discount of 5% of unit price if Fortnex purchases in lot sizes of 1000 kg. rather than the calculated EOQ. Determine if Fortnex should take advantage of the price discount. Justify your response. For a particular series of referenced products, the number of units used a year, and the unit cost are as shown in Table 3-2. Develop an ABC analysis and plot a Pareto chart to help Fortnex company to which items to give maximum and least attention. (ii)

3. Fortnex is a company that assembles small household appliances including coffee makers, toasters, and food mixers. The parent company of Fortnex has been concerned about the rising product cost of the finished products, which has led to reduced profit margins. One of the demands of the parent company has been to review the inventory management practices of Fortnex. Two areas which Fortnex is currently investigating are economic order quantity EOQ and ABC analysis. Perform the following. (i) At present the company purchases copper wire for a certain appliance under economic order quantities based on the information given in Table 3-1. The supplier of copper wire is proposing a discount of 5% of unit price if Fortnex purchases in lot sizes of 1000 kg. rather than the calculated EOQ. Determine if Fortnex should take advantage of the price discount. Justify your response. For a particular series of referenced products, the number of units used a year, and the unit cost are as shown in Table 3-2. Develop an ABC analysis and plot a Pareto chart to help Fortnex company to which items to give maximum and least attention. (ii)

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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3. Fortnex is a company that assembles small household appliances including coffee makers, toasters, and food mixers. The parent company of Fortnex has been concerned about the rising product cost of the finished products, which has led to reduced profit margins. One of the demands of the parent company has been to review the inventory management practices of Fortnex. Two areas which Fortnex is currently investigating are economic order quantity EOQ and ABC analysis. Perform the following. (i) At present the company purchases copper wire for a certain appliance under economic order quantities based on the information given in Table 3-1. The supplier of copper wire is proposing a discount of 5% of unit price if Fortnex purchases in lot sizes of 1000 kg. rather than the calculated EOQ. Determine if Fortnex should take advantage of the price discount. Justify your response. For a particular series of referenced products, the number of units used a year, and the unit cost are as shown in Table 3-2. Develop an ABC analysis and plot a Pareto chart to help Fortnex company to which items to give maximum and least attention. (ii)
Transcribed Image Text:3. Fortnex is a company that assembles small household appliances including coffee makers, toasters, and food mixers. The parent company of Fortnex has been concerned about the rising product cost of the finished products, which has led to reduced profit margins. One of the demands of the parent company has been to review the inventory management practices of Fortnex. Two areas which Fortnex is currently investigating are economic order quantity EOQ and ABC analysis. Perform the following. (i) At present the company purchases copper wire for a certain appliance under economic order quantities based on the information given in Table 3-1. The supplier of copper wire is proposing a discount of 5% of unit price if Fortnex purchases in lot sizes of 1000 kg. rather than the calculated EOQ. Determine if Fortnex should take advantage of the price discount. Justify your response. For a particular series of referenced products, the number of units used a year, and the unit cost are as shown in Table 3-2. Develop an ABC analysis and plot a Pareto chart to help Fortnex company to which items to give maximum and least attention. (ii)
Annual demand for copper wire, kg Price per kg, OMR Ordering cost, OMR/order Carrying cost, % of price Product reference Q4587 G458 G235 Z5892 B7894 C1289 Table 3-1 50 375 700 875 Table 3-2 Units a year 110 260 Unit Cost (OMR/unit) 25 8.4 20.4 2.4 1.1 0.36 2.45 10 20% 12,100 Total Cost (OMR) 2,750 2,184 1,020 900 770 315
Transcribed Image Text:Annual demand for copper wire, kg Price per kg, OMR Ordering cost, OMR/order Carrying cost, % of price Product reference Q4587 G458 G235 Z5892 B7894 C1289 Table 3-1 50 375 700 875 Table 3-2 Units a year 110 260 Unit Cost (OMR/unit) 25 8.4 20.4 2.4 1.1 0.36 2.45 10 20% 12,100 Total Cost (OMR) 2,750 2,184 1,020 900 770 315
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