What is the inventory control system for widgets

17)

Jill's Job shop buys two parts (Tegdiws and Widgets) for use in its production system from twodifferent suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used ata relatively constant rate and are ordered whenever the remaining quantity drops to the reorderlevel. Widgets are ordered from a supplier who stops by every three weeks. Data for bothproducts are as follows:

a. Tegdiws Widgets

Annual Demand 10,000 5,000

Holding cost (% of item cost) 20% 20%

Setup or order cost $150.00 $25.00

Lead time 4 1 week

Safety stock 55 5 units

Item Cost $10.00 $2.00

a.What is the inventory control system for Tegdiws? (reorder quantity and reorder point)Tegdiws – Fixed Order Quantity Model

b. What is the inventory control system for Widgets?

40.In the past, Taylor Industries has used a fixed–time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs.Here is a random sample of 20 of Taylor’s items.

ITEM NUMBER ANNUAL USAGE ITEM NUMBER ANNUAL USAGE

1 $1,500 11 $13,000

2 $12,000 12 $600

3 $2,200 13 $42,000

4 $50,000 14 $9,900

5 $9,600 15 $1,200

6 $750 16 $10,200

7 $2,000 17 $4,000

8 $11,000 18 $61,000

9 $800 19 $3,500

10 $15,000 20 $2,900

What would you recommend Taylor do to cut back its labor cost? (Illustrate using an ABC plan,-show work.

b. Item 15 is critical to continued operations. How would you recommend it be classified?

21. Item X is a standard item stocked in a company’s inventory of component parts. Each year the firm, on a random basis, uses about 2,000 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more item X, it costs $10.

a. Whenever item X is ordered, what should the order size be?

b. What is the annual cost for ordering item X?

c. What is the annual cost for storing item X?