Assignment -3 (two questions)

Q1. Due date: November 5th 2010

One of the retailers of IGA deals with consumer non-durables and

grocery items. The store manger is concerned for managing 23000
variety of items in the store. She wanted to apply ABC analysis that
she learned during her MBA for smooth management of the store.
She remembered that these items can be classified based on their
dollar value. To start with, the manager tried with 25 of the items sold
in a particular week and carried out an ABC Analysis. The item code,
the description of the items, the quantity sold and the unit price in
dollar are mentioned in a tabular form.

Question: List the items in descending order of their total

dollar value. Calculate the cumulative dollar value and
group them into class of A,B and C and plot the graph.
(7.5 )
Item code Item Description Quantity sold Unit Price per CTN
(March,2007) ( in dollar)
CO01010003 Cad Hazel nut 54 57.95
CO01010031 Black forest 29 57.95
CO01010081 Dream 26 57.95
CO01050003 Cad fruit & nut 68 56.03
CO01060001 Cad crunchy 12 138.73
CO01070011 Cad dairy milk 25 39.27
CO01090049 Cad timeout 52 66.36
CO01100003 Cad continental 11 69.47
CO01100019 Cad roses 25 50.00
CO01120043 Pascal Mr beans 74 20.77
CO02010051 Vita cheese & onion 193 18.59
CO03020007 Grif lemon treats 70 73.80
CO03070011 Grif Camille classic 143 54.83
CO03100003 Grif super wine 20 54.20
CO13010127 Pepsi 2Liter 1231 15.97
CO13020035 7UP 2 Lit 333 15.97
Item code Item Description Quantity sold Unit Price per CTN
(March 2007) ( in dollar)

CO13050061 Splitz tonic 93 20.85

CO13070001 H2Go 60 36.88
CO13130009 7UP 325ml 210 19.40
CO17010023 Kellogs corn flakes (310gm) 24 88.70
CO17010025 Kellogs corn flakes (525 gm) 62 82.31
CO17020001 Kellogs variety 27 82.54
CO17050019 Coco Pops 24 152.34
CO17130011 Kellogs Froot Loops 62 42.91
CO61010020 Dilmah TGTBag 36 1.88
 Assignment question…. Contd…

Q2: Quantity Discount model

Emery Pharmaceutical uses an unstable chemical compound that must be
kept in an environment where both temperature and humidity can be controlled.
Emery uses 800 pounds per month of the chemical, estimates the holding cost
to be 50% of the purchase price (because of spoilage), and estimates ordering
costs to be $20 per order. The cost schedules of the supplier is as follows:

Quantity price per pound

1-499 $14.00
500 – 999 $12.75
1000+ $10.50

Calculate the following:

1. Calculate EOQ quantity for each price range and what is the total cost for each
one?
What is your decision on EOQ and total cost? (7.5)