Question Two (15 Marks) The ABC inventory system is a useful technique for determining which inventories should be counted more frequently and managed more closely and which should not. ABC analysis is an inventory application of what is known as the Pareto principle (named after Vilfredo Pareto, a 19th century Italian economist). The Pareto principle states that there are "a critical few and trivial many." 2.1. Provide a discussion on the rationale of ranking inventory items in an ABC inventory system. (5 marks) 2.2. You are provided with the following information. Conduct an ABC analysis, categorising each item of stock appropriately. (80% = A, 15% = B, 5%=C) (10 marks) Average annual demand per unit in Rands Stock Units A1 A2 A4 AS A6 A7 A8 A9 A10 440 840 543 289 79 800 45 567 123 098 47 345 645 000 587 908 208 006 13 895