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A) Consider a warehouse with 5 SKU’s. The unit selling prices for these 5 items are $10, $5, $120, $500, and $ 24 respectively. The annual sales volume for these 5 items are 12,000 units, 1,000 units, 2,000 units, 20 units, and 300 units. According to our discussion on inventory profiling, what percentage of the annual sales is the result from the top 20% of the SKU’s? Ignore the percentage sign and round your answer to the nearest integer. For example, if your answer is 34.56%, input 35; if your answer is 12.23%, input 12.
B) According to the information in the last question, how many items should be classified as class C item? Round your answer to the nearest integer.
By how much do your recommendations for these two items reduce annual cycle inventory, stockout, and ordering costs?
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