Question

 A company uses an A. B, C classification system. The annual revenue from the 43 A items is $812,000, the annual revenue from the 164 B items is $257,000 and the annual revenue from the 511 C items is

 $52,000. Which items should be cycle counted most often?

•  The 511 C items

•  The 43 A items

•  The 164 B items

•  Do not favor any of the items. All items should be cycle counted the same amount

Answer 1

ABC classification is a ranking system for identifying and grouping items in terms of how useful they are for achieving business goals.

Items A constitute 43/ (43+164+511) = ~6% of items and $812000/ ($812000+$257000+$52000) = ~72% of revenue

Items B constitute 164/ (43+164+511) = ~23% of items and $257000/ ($812000+$257000+$52000) = ~23% of revenue

Items C constitute 511/ (43+164+511) = ~7% of items and $52000/ ($812000+$257000+$52000) = ~5% of revenue

The items in the A category will be counted most frequently where as the items in the C category will be counted less frequently.

Hence, correct answer is "The 43 A items"