Question

Your company has compiled the following data on the small set of products that comprise the specialty repair parts division. Perform ABC analysis on the data. Over which product do you suggest the firm keep the tightest control?

$$ \begin{array}{|c|c|c|} \hline \text { SKU } & \text { Annual Demand } & \text { Unit cost } \\ \hline \text { R11 } & 125 & \$ 25 \\ \hline \text { S22 } & 55 & \$ 90 \\ \hline \text { T33 } & 100 & \$ 500 \\ \hline \text { U44 } & 150 & \$ 550 \\ \hline \text { V55 } & 2000 & \$ 4 \\ \hline \end{array} $$

• S22
• R11
• U44
• V55
• T33

Answer 1

BECAUSE IT HAS THE HIGHEST DOLLAR %

ITEM	DEMAND	COST/UNIT	DOLLAR VALUE	DOLLAR %	CLASSIFICATION
R11	125	25	3125	2.1	C
S22	55	90	4950	3.33	C
T33	100	500	50000	33.65	A
U44	150	550	82500	55.53	A
V55	2000	4	8000	5.38	B
			148575	100

The answer is C. U44