Please help me solve this problem.. Please give me the right answer.. Thank you
ID: 352069 • Letter: P
Question
Please help me solve this problem.. Please give me the right answer.. Thank you
KPO, Inc., is considering the use of ABC analysis to classify SKUs in three categories: those that will be delivered daily from their supplier (class A items), those that will be controlled using a continuous review system (class B items), and those that will be held in a two-bin system (class C items). KPO Inc. has asked you to determine the ABC classification.
The table below shows the data for 10 inventoried items
Item Average Monthly Demand Price per unit
1 700 $6
2 200 $4
3 150 $200
4 1,100 $20
5 3,000 $21
6 1,000 $1
7 3,000 $2
8 2,500 $1
9 500 $10
10 1,000 $2
Explanation / Answer
Category A- Items 3,4 and 5
Category B- Item 7
Category C- Items 1,2,6,8,9 and 10
Item Monthly Demad Price Monthly Consumption value Usage as % of total usage 1 700 6 4200 3.1% 2 200 4 800 0.6 3 150 200 30000 22% 4 1100 20 22000 16.11% 5 3000 21 63000 46.15% 6 1000 1 1000 0.7% 7 3000 2 6000 4.4% 8 2500 1 2500 1.83% 9 500 10 5000 3.66% 10 1000 2 2000 1.5% total 136500 100%