##### Question

In: Operations Management

# Over which product do you suggest the firm keep the tightest control?

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

## Solutions

##### Expert Solution

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