Henderson Air manufactures heating and air conditioning systems. Recently, the management team decided to implement a new method of classifying inventory based on two key criteria: value (as measured by the contribution to profit) and risk (as measured by the negative impact of not having the product available when needed). Which classification method is Henderson Air using?

Question

Quizplus · Accepted Answer

The Quadrant model is the most suitable option for the given criteria of value and risk. It classifies inventory into four categories based on the combination of these two criteria. This model helps to prioritize inventory management efforts by focusing on high-value, high-risk items while also identifying items that may require attention due to their lower value but high risk if not available. The other options mentioned (ABC, Axis model, and Square-root method) do not consider risk as a factor in classifying inventory.

Henderson Air Manufactures Heating and Air Conditioning Systems