Question: Efficient inventory management is important to a company mainly because of the position of inventory in the working capital cycle. Holding excess inventory can lead

Efficient inventory management is important to a company mainly because of the position of inventory in the working capital cycle. Holding excess inventory can lead to obsolescence and can seriously reduce a companys financial flexibility. Today, most manufacturing companies in malaysia apply the ABC analysis as one of its inventory management strategies.

(b) Explain how ABC analysis applied as an inventory management strategy.

hint:- ABC analysis determines the value of the inventory items based on their importance to the business in terms of demand, cost & risk. Inventories are then grouped as A item being the most important, C the least important. Support answer with examples.

(please provide detailed answer.minimum words count 500

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