QUESTION $5(20$ marks$)$

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$)$

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Stock Units

Average demand per unit

A$1$

$440840$

A$2$

$543289$

A$3$

$79800$

A$4$

$45567$

A$5$

$123098$

A$6$

$47345$

A$7$

$645000$

A$8$

$587908$

A$9$

$208006$

A$10$

$13895$