Question: AAU is considering doing an ABC analysis AAU is considering doing an ABC analysis of its entire inventory but has decided to test the technique

AAU is considering doing an ABC analysis

AAU is considering doing an ABC analysis AAU is

AAU is considering doing an ABC analysis of its entire inventory but has decided to test the technique on a small sample of 15 of its stock-keeping units. The annual usage and unit cost for these items are shown in the table. (a) Calculate the annual dollar volume for each item. (b) List the items in descending order based on annual dollar usage. (c) Calculate the cumulative annual dollar volume. (d) Group the items into classes. ABC Problem Data Annual Usage Item Unit $ Value (in units) 101 12.00 102 50.00 103 15.00 104 50.00 40.00 106 75.00 4.00 1.50 2.00 25.00 107 109 110 5.00 112 113 114 115 7.50 3.50 1.00 15.00 250 1200 300 Before You Begin: To do an ABC analysis, you need to know the annual usage and the value of each item. That information is provided for you in the problem data. Multiply the unit value by the annual usage of the item to determine the annual dollar volume for each item. Now list the items in descending order based on annual dollar usage. You can now calculate the percentage of the total inventory value each part represents. This allows you to classify the items into groups

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