In ABC analysis,the classification of items is made on the basis of: A)Consumption value of materials. B)Investment value of materials. C) Quantity of material consumed. D)All of these.
Answers
Given : ABC analysis,
To Find : the classification of items is made on the basis of
A)Consumption value of materials.
B)Investment value of materials.
C) Quantity of material consumed.
D)All of these.
Solution:
In ABC analysis,the classification of items is made on the basis of:
Consumption value of materials.
consumption value = demand x item cost per unit
ABC analysis is for inventory categorization
A - highest value item
C - Lowest Value item
ABC analysis works on Pareto principle of 20-80
where 20% items contribute to 80 % cost
A-items: 15-20% of all goods contribute to 70-80% of the annual consumption value of the items
B-items: 20-30% of all goods contribute to 15-25% of the annual consumption value of the items
C-items: 40-60% of all goods contribute only 5% of the annual consumption value of the items
In ABC analysis,the classification of items is made on the basis of:
Consumption value of materials.
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