This case study analyzes inventory management of PC products at Nationkidz Company. It applies ABC analysis to categorize 17 product items into categories A, B and C based on their annual usage. It then uses the economic order quantity (EOQ) model to determine the optimal order quantity and interval for the highest usage item, a 2.0GHz DVD-ROM PC priced at RM420 with annual demand of 8 units. The analysis finds the EOQ is 13 units and the order interval should be every 2 years. This provides Nationkidz with an inventory management solution to better control stock levels and ordering.

1. INVENTORY MANAGEMENT : A CASE STUDY OF
PERSONAL COMPUTER PRODUCT AT
NATIONKIDZ COMPANY
BY
AINUN MARDHIYYAH BINTI MUSA
AMALINA ATHIRAH BINTI MOHD SAUPI

2. 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.

3. 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.

4. 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

5. 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
=
𝑨𝒏𝒏𝒖𝒂𝒍 𝑼𝒔𝒂𝒈𝒆
𝑻𝒐𝒕𝒂𝒍 𝑨𝒏𝒏𝒖𝒂𝒍 𝑼𝒔𝒂𝒈𝒆
(1)

6. Step 4: after complete step 3, find the cumulative Annual
Usage Percentage
=
𝒄𝒖𝒎𝒖𝒍𝒂𝒕𝒊𝒗𝒆 𝒗𝒂𝒍𝒖𝒆
𝒕𝒐𝒕𝒂𝒍 𝒄𝒖𝒎𝒖𝒍𝒂𝒕𝒊𝒗𝒆
× 𝟏𝟎𝟎% (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

7. 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
𝑸∗ =
𝟐𝑫𝑪𝒐
𝑪𝒉
D = annual demand in units
Q* or EOQ = economic order quantity
Co = ordering cost per order
Ch= holding cost per unit per year
Step 3: Calculate number of order interval
𝑻 =
𝑸∗
𝑫

8. ANALYSIS AND DISCUSSION

9. Item Brand Classification Items Price Pc Set
Quantity
Demand
1.7 ghz, ram 512, hdd 40gb, cd-rom Emax Hitam A1 390 5
1.7 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 7
2.0 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 1
2.6 ghz, 1 gb, hdd 40gb, dvd-rw Emax Hitam A13 500 3
2.6 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

10. Items
Descending
Order 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

11. P = RM420
D = 8 units per year
Ch = 15% of items
= 0.15 X RM420
= RM 63
N = 365 days per year
Co = RM 630
Product from category A, (Item 7) have highest
demand and price
: 2.0 ghz , Ram 512, HDD 40gb, DVD-Rom

12. 𝑄∗ =
2(8)(630)
63
𝑄∗ = 12.65
By approximate
𝑄∗≈ 13 𝑢𝑛𝑖𝑡𝑠
To find economic
ordering quantity :
To find order
interval :
D = 8 and 𝑸∗ = 13 units.
𝑂𝑟𝑑𝑒𝑟 𝐼𝑛𝑡𝑒𝑟𝑣𝑎𝑙, 𝑇 =
𝑄∗
𝐷
𝑇 =
13
8
𝑇 = 2 𝑦𝑒𝑎𝑟𝑠

13. 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