Assignment # 02
production/operations management (mgt613)
Topic: Inventory Management
Objective: The objective of the assignment is to numerically perform the concept of different types of inventory management systems.
Abacus IT solution providers is located in the Business Centre of down Town. Abacus is considered the Giant retailer of IT products and has an estimated local market share of 55%. It offers comparatively lower prices than other vendors due to its outsized operations and economies of scale. Abacus deals with large, medium to small corporations as well as household clienteles and offers services including hardware, software, assembling and selling of IT products. Two of its “BEST” selling products to big corporations are Laser Inkjet Printers and Ink Toner/ Cartridge which are complementary goods. The monthly purchase of printer is 500 at a price of Rs. 5000/ unit with ordering cost and annual carrying cost Rs. 500 and Rs. 1000 respectively. The monthly purchase of Refilling Toner/ Cartridge is 250 at a price of Rs. 1000 per cartridge with ordering cost and annual carrying cost Rs. 500 and Rs. 750 respectively.
1. Calculate the optimal quantity to be ordered for both of the products.
2. Compute total annual ordering and carrying cost of inventory for both products.
The answer should be in mathematical form only and doesn’t need any theory. But it should also include formulas.
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