A company would like to classify its inventory systems using ABC inventory classification system. The rules for ABC classification are STRICTLY applied such that 80% cumulative budget is assigned to A class inventory items. The next 15% cumulative budget is assigned to B class inventory items, and Only 5% of the cumulative budget is assigned to C class inventory items. The inventory items are XYZ1,XYZ2, XYZ3, and XYZ4 respectively. The Annual demands (units per year) for these items are 290, 457, and 159, and 577 respectively. Also, the corresponding per unit prices are 19, 33, 126, and 90 respectively measured in OMR. Which items (among, XYZ1,XYZ2, XYZ3, and XYZ4) are classified as A class inventory a. XYZ1 only O b. Only XYZ3 O c. Both XYZ3 and XYZ4 O d. All items None is correct

Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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A company would like to classify its inventory systems using ABC inventory classification system. The rules for
ABC classification are STRICTLY applied such that 80% cumulative budget is assigned to A class inventory
items. The next 15% cumulative budget is assigned to B class inventory items, and Only 5% of the cumulative
budget is assigned to C class inventory items. The inventory items are XYZ1, XYZ2, XYZ3, and XYZ4
respectively. The Annual demands (units per year) for these items are 290, 457, and 159, and 577
respectively. Also, the corresponding per unit prices are 19, 33, 126, and 90 respectively measured in OMR.
Which items (among, XYZ1, XYZ2, XYZ3, and XYZ4) are classified as A class inventory
O a. XYZ1 only
O b. Only XYZ3
Both XYZ3 and XYZ4
d.
All items
O e. None is correct
Transcribed Image Text:A company would like to classify its inventory systems using ABC inventory classification system. The rules for ABC classification are STRICTLY applied such that 80% cumulative budget is assigned to A class inventory items. The next 15% cumulative budget is assigned to B class inventory items, and Only 5% of the cumulative budget is assigned to C class inventory items. The inventory items are XYZ1, XYZ2, XYZ3, and XYZ4 respectively. The Annual demands (units per year) for these items are 290, 457, and 159, and 577 respectively. Also, the corresponding per unit prices are 19, 33, 126, and 90 respectively measured in OMR. Which items (among, XYZ1, XYZ2, XYZ3, and XYZ4) are classified as A class inventory O a. XYZ1 only O b. Only XYZ3 Both XYZ3 and XYZ4 d. All items O e. None is correct
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