Randy Jones decided to run an ABC analysis of his 500 stock keeping inventory items. He found that his average inventory was $200,000 and that there were 378 items out of the 500 that cost him $24,000. These 378 items would be classified as items.

Question

Quizplus · Accepted Answer

ABC analysis is a method of classifying inventory items based on their importance to the business, typically in terms of cost or usage. Items are categorized into three classes: A, B, and C. 'A' items are the most valuable, making up a small percentage of the inventory but a large portion of the inventory value. 'C' items are the least valuable, making up a large percentage of the inventory but a small portion of the inventory value. Since the 378 items represent a large portion of the inventory (over 75%) but only account for $24,000 of the total inventory value, which is a small portion of the $200,000 average inventory, they would be classified as 'C' items.

Randy Jones Decided to Run an ABC Analysis of His