ABC Company has kept ten products in its warehouse. Its inventory database consists of ‘Product ID’, ‘Unit Price (in dollars)’ and ‘Quantity (in units)’. For managing its inventory effectively, the Company will classify its inventory based on the investment of an individual product. Which of the following approaches are correct?1) Use of ABC Analysis2) Use of Matrix Analysis3) Based on the ‘Unit Price (in dollars)’, calculation of the total inventory amount of each product in the ‘Quantity (in units)’ column. Then arranging them in descending order according to the amount of goods accounted for and calculating the cumulative percentage of each product. Finally, dividing the products into A, B, C categories.4) Based on the ‘Unit Price (in dollars)’, calculating the total inventory amount of each product in the ‘Quantity (in units)’ column. Then arranging them in descending order according to the amount of product accounted for and calculating the proportion of each product. Finally, dividing the products into A, B, C categories.Question 20Select one:a.1,3b.2,3c.3,4d.1,2
Question
ABC Company has kept ten products in its warehouse. Its inventory database consists of ‘Product ID’, ‘Unit Price (in dollars)’ and ‘Quantity (in units)’. For managing its inventory effectively, the Company will classify its inventory based on the investment of an individual product. Which of the following approaches are correct?1) Use of ABC Analysis2) Use of Matrix Analysis3) Based on the ‘Unit Price (in dollars)’, calculation of the total inventory amount of each product in the ‘Quantity (in units)’ column. Then arranging them in descending order according to the amount of goods accounted for and calculating the cumulative percentage of each product. Finally, dividing the products into A, B, C categories.4) Based on the ‘Unit Price (in dollars)’, calculating the total inventory amount of each product in the ‘Quantity (in units)’ column. Then arranging them in descending order according to the amount of product accounted for and calculating the proportion of each product. Finally, dividing the products into A, B, C categories.Question 20Select one:a.1,3b.2,3c.3,4d.1,2
Solution
The correct answer is c.3,4.
Here's why:
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Use of ABC Analysis: This is a correct approach. ABC analysis is a method of categorizing inventory items into three categories: A - high value items with a low frequency of sales, B - moderate value items with a moderate frequency of sales, and C - low value items with a high frequency of sales. This helps in inventory management as it allows the company to focus on items that are of high value.
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Use of Matrix Analysis: This is not a correct approach. Matrix analysis is a tool used for strategic planning and not for inventory management.
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Based on the ‘Unit Price (in dollars)’, calculation of the total inventory amount of each product in the ‘Quantity (in units)’ column. Then arranging them in descending order according to the amount of goods accounted for and calculating the cumulative percentage of each product. Finally, dividing the products into A, B, C categories: This is a correct approach. This is essentially the ABC analysis method where items are categorized based on their value and frequency of sales.
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Based on the ‘Unit Price (in dollars)’, calculating the total inventory amount of each product in the ‘Quantity (in units)’ column. Then arranging them in descending order according to the amount of product accounted for and calculating the proportion of each product. Finally, dividing
Similar Questions
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