The NextGen distribution is working on improving inventory management by performing an ABC Analysis. The management team
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 and GMROI. The GMROI range has been determined based on best-in-class industry numbers, where A items have over 1000, B items have a number between 500 and 1000, and C items have a number below 500. Assume A item is 5, B is 3, and C is 1 point. And GMROI is two times as important as hits. Finally, top 70% is a next 25%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 GMROI.
Entrepreneurial Finance
ISBN: 978-1305968356
6th edition
Authors: J. Chris Leach, Ronald W. Melicher