Question: The NextGen distribution is working on improving inventory management by performing an ABC Analysis. The management team considers the following factors for the analysis: hits

The NextGen distribution is working on improving inventory management by performing an ABC Analysis. The management team considers the following factors for the analysis: hits and criticality to operations. The criticality to operations has been calculated using the Analytical Hierarchy Process (AHP) by an outside consultant, Given the initial ABC categories combine these two categories to come up with the final classification. Assume A item is 5, B is 4, and C is 1 point. And criticality is three times as important as hits. Finally, top 80% is a next 35%B and the rest are C items. (Use three decimal place accuracy for ratio and cumulative ratio calculations when needed, e.g., 0.123)

a. Perform the final ABC Analysis by combining hits and criticality.

Item

Hits

Criticality

1

A

B

2

C

B

3

B

C

4

A

C

5

C

B

6

C

A

7

C

B

8

B

A

9

B

A

10

A

C

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