Question: ABC Analysis classifies inventory into three categories according to some measure of importance with the intention of allocating control efforts accordingly. The idea is

ABC Analysis classifies inventory into three categories according to some measure of

ABC Analysis classifies inventory into three categories according to some measure of importance with the intention of allocating control efforts accordingly. The idea is to establish inventory policies that focus resources on a few critical inventory parts and not the many trivial ones. It is not realistic to monitor inexpensive stock with the same intensity as very expensive items. You are provided with the following information. Conduct an ABC analysis, categorising each item of stock appropriately. (80% = A, 15% = B, 5%=C) Stock Units A1 A2 A3 A4 A5 A6 A7 A8 A9 A10 Average demand per unit 440 840 543 289 79 800 45 567 123 098 47 345 645 000 587 908 208 006 13 895

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To conduct an ABC analysis we need to calculate the cumulative percentage of the average demand for each item and categorize them accordingly based on ... View full answer

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