A manufacturing company has the following 8 items in inventory. Divide these items into ABC classification 1 A2 1250000 2 B8 250000 3 C6 1650225 4 D3 1865 5 E1 2657 6 F5 325000 7 G9 1875000 8 H7...

A manufacturing company has the following 8 items in inventory. Divide these items into ABC classification

1 A2 1250000

2 B8 250000

3 C6 1650225

4 D3 1865

5 E1 2657

6 F5 325000

7 G9 1875000

8 H7 125986

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gsenviro | College Teacher | (Level 1) Educator Emeritus

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The ABC classification system is a statistical method for inventory control and divides the inventory on the following general rule:

Class A: 20% of items,  80% total value

Class B: 30% of items, 15% total value 

Class C: 50% of items, 5% total value

There are some other similar classifications with different percent distributions in terms of quantity and total value. However, the key idea is that the smallest number of inventory items (typically high value items) belongs to class A, mid-value products to class B, and the remainder to class C.

Using this terminology (and assuming that the given numbers refer to the quantity of items) the given inventory items can be classified as:

A Class: D3 (1865 items) and E1 (2657 items)

B Class: B8 (250000), F5 (325000), H7 (125986), 

C Class: A2 (1250000), C6 (1650225), G9 (1875000)

Ideally, the values of these items would help in a more accurate classification.

If the given numbers refer to the price/value of an inventory item, then the classification would be :

A: A2, C6,G9              (High value items)

B: B8, F5, H7             (Medium Value items)

C: D3 and E1             (Low value items)

Sources:

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