Describe the ABC inventory classification approach. How might this approach be used in a store selling...

Describe the ABC inventory classification approach. How might this approach be used in a store selling cell phones and accessories?

Expert Solution

ABC inventory approach is used to classify the inventory according its the value and sales volume as category A, category B and category C.

Category A are the items in the inventory that are most valuable and has least sale volume whereas category C are the items in the inventory that are least valuable and has high sale volume.

This analysis is used by the managers to focus on most valuable items in the inventory to control inventory

Category A - This includes most valuable and critical items of inventory that has less sale volume.

Category B - This includes less valuable items in the inventory than category A. This items of inventory can move to category A or category C according to its sales volume.

Category C - This includes items that are least valuable but the sale volume is high that provides a steady income. In this category individual sale value is least.

This approach helps the store manager to manage the inventory of the cell phone and accessories.

High value cell phones that has least sale volume will be category A

Moderatly valuable cell phones and accessories that has moderate sale volume will be category B

And least valuable cell phones and accessories that has high sale volume will be category C.

keosha answered 2 months ago

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