ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is ABC system?
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A method of dividing on hand inventory into 3 classifications,
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A method of segregate the inventory into 3 classifications.
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Either A or B
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None of the above
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Explanation:
Detailed explanation-1: -ABC analysis is a method in which inventory is divided into three categories, i.e. A, B, and C in descending value. The items in the A category have the highest value, B category items are of lower value than A, and C category items have the lowest value. Inventory control and management are critical for a business.
Detailed explanation-2: -An example of ABC classification is as follows: “A” items – 20% of the items (customers) accounts for 70% of the revenue. “B” items – 30% of the items (customers) accounts for 20% of the revenue. “C” items – 50% of the items (customers) accounts for 10% of the revenue.
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