INVENTORY MANAGEMENT : A CASE STUDY OF PERSONAL COMPUTER PRODUCT AT

NATIONKIDZ COMPANY

BY

AINUN MARDHIYYAH BINTI MUSA AMALINA ATHIRAH BINTI MOHD SAUPI

CASE STUDY

• Nationkidz Company operates its company 365 days per year. They sell PC such as laptop, desktop, monitor, and other computer appliances. One of the products they sell is Emax brand PC.

• They sell 17 type of items• The holding cost of the year is 15% of the price and

the ordering cost is RM 630.• By doing ABC analysis, we will know how stock of

each category can be control. The economic order quantity also can be determining the optimum quantity of this product. Hence, order interval also can be obtained.

PROBLEM STATEMENTS

• Company has poor inventory control - unable to categorized their product with category A, B or C.

• Cannot predict the order quantity that need to order.

• Wants to know lenght cycle time to order.

OBJECTIVES

To categorize the Emax PC into A, B, and C by using ABC Analysis

To determine the economic order quantity (EOQ) of Emax PC

To find out order interval of Emax PC

METHODOLOGY

.

Procedure 1: Apply ABC analysis procedure Step 1: Represent the data in excel and find the

Annual usage in (RM) = Unit Price Demand Step 2: Sort the data by percentage annual usage in descending order.

Step 3: Find the cumulative of annual usage for each item. The cumulative of annual usage for each item = (1)

Step 4: after complete step 3, find the cumulative Annual Usage Percentage

= (2) Step 5: Group the items into A, B or C categories

Items A : the items that most important and need special care

Item B : the items that intermediate in important and need standard care

Item C : the item that least important and need little care

Procedure 2: Solving inventory model Step 1: Holding Cost

Holding Cost 15% Price of the product Step 2: To find economic order quantity or Q* by mathematical is

D = annual demand in unitsQ* or EOQ = economic order quantityCo = ordering cost per orderCh= holding cost per unit per year Step 3: Calculate number of order interval

ANALYSIS AND DISCUSSION

Item Brand Classification Items Price Pc SetQuantity Demand

1.7 ghz, ram 512, hdd 40gb, cd-rom Emax Hitam A1 390 51.7 ghz, ram 512, hdd 40gb, cd-rw Emax Merah A2 390 6

1.7 ghz, ram 512, hdd 40gb, agp 64 mb, cd-rom Emax Merah A3 390 8

1.8 ghz, ram 512, hdd 40gb, cd-rom Emax Hitam A4 400 1

2.0 ghz, ram 512, hdd 40gb, cd-rom Emax Hitam A5 410 72.0 ghz, ram 512, hdd 40gb, cd-rw Emax Hitam A6 415 1

2.0 ghz, ram 512, hdd 40gb, dvd-rom Emax Merah A7 420 8

2.4 ghz, ram 1 gb, hdd 80gb, dvd-rw Emax Merah A8 480 4

2.4 ghz, ram 512mb, hdd 80gb, cd-rom Emax Merah A9 465 1

2.4 ghz, ram 512mb, hdd 40gb, cd-rom Emax Merah A10 450 3

2.4 ghz, ram 512mb, hdd 40gb, cd-rom Emax Hitam A11 450 1

2.4 ghz, ram 512mb, hdd 40gb, dvd-rom Emax Hitam A12 460 12.6 ghz, 1 gb, hdd 40gb, dvd-rw Emax Hitam A13 500 32.6 ghz, 1 gb, hdd 40gb, cd-rom Emax Hitam A14 470 1

2.8 ghz, ram 512mb, hdd 40gb, cd-rw Emax Merah A15 500 2

2.8 ghz, ram 512mb, hdd 80gb, cd-rw Emax Merah A16 500 1

3.0 ghz, ram 512mb, hdd 80gb, cd-rom Emax Merah A17 600 1

Items

DescendingOrder of annual

usage Cummulative Cummulative Percentage % Category

A7 3360 3360 15 A

A3 3120 6480 28 A

A5 2870 9350 40 A

A2 2340 11690 50 A

A1 1950 13640 59 A

A8 1920 15560 67 A

A13 1500 17060 74 B

A10 1350 18410 79 B

A15 1000 19410 84 B

A17 600 20010 86 B

A16 500 20510 89 B

A14 470 20980 91 C

A9 465 21445 93 C

A12 460 21905 95 C

A11 450 22355 96 C

A6 415 22770 98 C

A4 400 23170 100 C

Total 23170

Table 3.3: Cummulative Percentage for Each Items

P = RM420D = 8 units per yearCh = 15% of items = 0.15 X RM420 = RM 63N = 365 days per yearCo = RM 630

Product from category A, (Item 7) have highest demand and price : 2.0 ghz , Ram 512, HDD 40gb, DVD-Rom

By approximate

To find economic ordering quantity :

To find order interval :

D = 8 and = 13 units.

Conclusion

• Nationkidz Company should pay more attention product in Category A

• By using inventory control system, the company can know the quantity order that should order are 13 units

• The company should placing order and the next order is 2 years