Question:

Your manager asks you to perform ABC Analysis to increase the efficiency of your company. He provides following data related to hits and total profit for each item; then asks an analysis based on combination of hits and total profit. Perform ABC Analysis for your company with A items = top 55%, B items = next 30%, C items are the remaining ones. Manager believes that profit made from a product is three times more important hits of the product. (Assume , , and )

ITEM	Hits	Total Profit
1	13	360
2	30	575
3	5	1400
4	7	725
5	67	520
6	105	450
7	10	1500
8	15	350
9	36	800
10	16	125

4. Explain reasons for a company to keep inventory

5. Describe the following inventory problems and policies briefly ?

a. Newsvendor Problem

b. Continuous Review Inventory Policy

c. Periodic Review Inventory Policy