Inventory Management


The purpose of this assignment is for you to apply the information learned thus far to the development of an inventory plan for the Jones company. You will accomplish this goal by performing an ABC analysis on Jones’ stock. You will also calculate the EOQ’s for the items.


Now that you’ve assisted Jones Company with their customer demand forecasts, master schedule, and MRP schedule, it’s time to help them get a handle on managing their inventories. You have two objectives.

Create an ABC analysis for the following components and recommend at least three ways Jones should manage the inventory of these items based on your analysis.
Part Number Annual Usage
15A 40,000
23A 86,000
46B 120,000
29C 55,000
54C 250,000
11D 67,000
17E 15,000
49F 68,000
57F 140,000
62G 77,000

Calculate EOQs for these items. Ordering costs for the first five items are $50 and for the second five items are $70. Carrying costs for the first seven items are $3 per unit per year and for the last three items are $4. Identify the total costs of obtaining inventory and the total cost of keeping inventory for each item.
Required Elements of the ABC Assessment:

Create a Complete ABC analysis of the items in Jones’ inventory found in the table.

Explain in detail how you arrived approached the application of the ABC assessment.

Make at least three recommendations as to how Jones might best manage the inventory of the items listed in the table. Explain in detail why these recommendations would prove a better means of controlling the inventory thereby saving the company money.

Required Elements of the EOQ Assessment:

Identify the total costs of obtaining inventory.

Identify the total cost of keeping inventory for each item.

Explain how this information will affect your recommendations made from the ABC analysis. If there is no change, why or why not?

What changes might Jones adopt to better manage their inventories?

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