ABC analysis divides on-hand inventory into three classes, generally based upon
A) item quality
B) unit price
C) the number of units on hand
D) annual demand
E) annual dollar volume

Question

Quizplus · Accepted Answer

ABC analysis divides inventory into three classes based on their annual dollar volume, which is the product of the unit price and annual demand. This is why E) annual dollar volume is the best choice. A) item quality, B) unit price, C) the number of units on hand, and D) annual demand are not the primary factors in determining inventory classification in ABC analysis.

ABC Analysis Divides On-Hand Inventory into Three Classes, Generally Based