Which of the following statements about ABC analysis is false? A) ABC analysis is based on...

Which of the following statements about ABC analysis is false?

A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.

B) In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers.

C) In ABC analysis, "C" Items have minimal records, periodic review, and simple controls.

D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.

E) In ABC analysis, "B" items are not as tightly controlled as "A" items.

Expert Solution

The correct answer is (D).

(D) is FALSE because the underlying assumption of ABC analysis is that not all items need equal attention as long as the inventory policy decision is concerned and controlling the few most important items will produce the vast majority of inventory savings.

keosha answered 2 years ago

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