Page 281 - DCOM303_DMGT504_OPERATION_RESEARCH

Operations Research

Notes Rank Simple % Cummulative Consumption Cumulative Cumulative Category
value c.v. %
1–5 5/20×100 = 25% 25 1,83,900 1,83,900 88.77% A
6–11 6/20×100 = 30% 55 20,500 2,04,400 98.67% B
12–20 9/20×100 = 45% 100 2,772 2,07,172 100% C

Graphical representation:

Y
100

Cumulative Consumption Value % 75 B C

50

25

0 A 25 50 75 100 X
Cumulative Rate of Consumption %

Task The following information is known about a group of materials to be classified in
ABC categories:

Model No. Annual consumption in units Cost per unit (`)
501 30,000 0.10
502 2,80,000 0.15
503 3,000 0.10
504 1,10,000 0.05
505 4,000 0.10
506 2,20,000 0.05
507 15,000 0.05
508 80,000 0.15
509 60,000 0.10
510 8,000 0.10

13.3.2 VED Analysis (Vital. Essential and Desirable Items Analysis)

This analysis is basically used to control spare parts keeping in view criticality of the items
needed in production, the spare parts are classified in to three categories as Vital Essential and
Desirable. Such spare parts, if they are not available on time to carry on production activities
and virtually the activities may come to a standstill. These items are categorized as ‘vital spares’.
The spares, non-availability of which cannot be tolerated for more than a few hours or a day and
the cost of lost production is high and at the same time ‘which’ are essential for the production
to continue are known as ‘essential spares’. The spares which are needed but their absence for a

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