Question

1) Perform an ABC analysis on the following set of products. Show all work! (This question was already answered but there was no work shown, so please show how you reached each answer.)

Item	Annual Demand	Unit Cost
A211	800	$9
B390	100	$90
C003	450	$6
D100	400	$100
E707	85	$2,000
F660	250	$320
G473	500	$75
H921	100	$75

Item	Annual Demand	Unit Cost	Volume	Cumulative volume	Cumulative percent
			Total =

Answers (with work shown):

Answer 1

Item number	Annual demand	Unit cost	total cost= unit cost*annual demand	Cumulative volume	Percent by cost= cost/total sum cost	Cumulative percent
A	800	$9	$7,200	$7,200	2.03%	2.03%
B	100	$90	$9,000	$16,200	2.54%	4.58%
C	450	$6	$2,700	$18,900	0.76%	5.34%
D	400	$100	$40,000	$58,900	11.30%	16.64%
E	85	$2,000	$170,000	$228,900	48.04%	64.68%
F	250	$320	$80,000	$308,900	22.61%	87.28%
G	500	$75	$37,500	$346,400	10.60%	97.88%
H	100	$75	$7,500	$353,900	2.12%	100.00%
Total	2,685		$353,900	100.00%

ABC analysis

Arrange in decreasing order of total cost

Item number	Annual demand	Unit cost	total cost= unit cost*annual demand	Cumulative volume	Percent by cost= cost/total sum cost	Cumulative percent
E	85	$2,000	$170,000	$170,000	48.04%	48.04%
F	250	$320	$80,000	$250,000	22.61%	70.64%
D	400	$100	$40,000	$290,000	11.30%	81.94%
G	500	$75	$37,500	$327,500	10.60%	92.54%
B	100	$90	$9,000	$336,500	2.54%	95.08%
H	100	$75	$7,500	$344,000	2.12%	97.20%
A	800	$9	$7,200	$351,200	2.03%	99.24%
C	450	$6	$2,700	$353,900	0.76%	100.00%