Sam is an inventory manager who is trying to decide which classification of the

Question

Sam is an inventory manager who is trying to decide which classification of the ABC system should be given to 500 laptops his business holds in inventory.The value of the laptops is $200 each and can be procured easily. The other items in inventory are 100 Surface units valued at $1,200 each which can also be procured easily, and 50 cameras which are made in Germany and are in high demand; back orders are frequent and it can take 6 months for delivery; the units are valued at $500 each. What classification would be best for Sam to assign to the 500 laptops? a. B and C, these inventory item has both the highest quantity level and the middle total $ value as compared to the other two items. b. B, this inventory item has a lower $ value as compared to the Surface units, but a higher $ value as compared to the cameras c. C, as this inventory item has the lowest per unit $ value, and is easier to obtain as compared to the cameras d. A, this inventory item has the highest quantity level compared to the other two items.

Explanation / Answer

Answer is option b.

It can be seen that from the above calculations % of value is about 40% where as % of volume is 76%., As this inventory has lower dollar value than surface units and high dollar value as compared to cameras.

Particulars Value Number % of value to total value % of number to total volume Laptops 100000 500 40.82% 76.92% Surface units 120000 100 48.98% 15.38% Cameras 25000 50 10.20% 7.69% Total value 245000 650

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