ABC analysis is based upon the principle that A. all items in inventory must be monitored very closely B. there are usually a few critical items, and many items which are less critical C. an item is critical if its usage is high D. an item is critical if its unit price is high
Question
ABC analysis is based upon the principle that A. all items in inventory must be monitored very closely B. there are usually a few critical items, and many items which are less critical C. an item is critical if its usage is high D. an item is critical if its unit price is high
Solution
The ABC analysis is based on the principle that there are usually a few critical items, and many items which are less critical. So, the correct answer is B. This method is used in inventory management to categorize inventory into three classes, A, B, and C. 'A' items are very important for an organization due to their high usage value, 'B' items are important but not so much as 'A' items and 'C' items are the least important. This principle is not necessarily related to the unit price or usage of the item.
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