question archive Perform an ABC analysis for the data provided in worksheet below
Perform an ABC analysis for the data provided in worksheet below
Subject:Operations ManagementPrice:1.87 Bought7
Perform an ABC analysis for the data provided in worksheet below. Clearly explain why you classified items as A, B, or C.
| Chapter 12 Problem 5 | ||
| Annual | Unit | |
| Item | Usage | Cost |
| 1 | 1000 | $125.00 |
| 2 | 5000 | $67.00 |
| 3 | 1350 | $25.30 |
| 4 | 1600 | $42.90 |
| 5 | 2700 | $51.75 |
| 6 | 4750 | $17.30 |
| 7 | 6300 | $35.80 |
| 8 | 2400 | $14.60 |
| 9 | 2000 | $15.40 |
| 10 | 500 | $40.50 |
| 11 | 820 | $82.60 |
| 12 | 5800 | $35.62 |
| 13 | 9000 | $44.90 |
| 14 | 8200 | $3.60 |
| 15 | 750 | $55.70 |
| 16 | 6000 | $4.50 |
| 17 | 3200 | $6.80 |
| 18 | 8500 | $10.20 |
| 19 | 6200 | $32.60 |
| 20 | 2400 | $19.51 |
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Answer:
We might classify the first six items, which account for 30% of items and about 68% of dollar usage as A items, and the last 10 items as C items. Again, there is no strict rule and students will have differing opinions on how to classify them. So, one example ABC profile would be as follows:
- A items are 30% of total items and 68% of total inventory value
- B items are 20% of total items and 26% of total inventory value
- C items are 50% of total items and 16% of total inventory value
