Question

A company uses ABC analysis to manage its inventory and it had just adopted abnew product....

A company uses ABC analysis to manage its inventory and it had just adopted abnew product. While this new product is an important part of the company sales, it is relatively cheap to manufacture and is not prone to expiring. It should be ___.

Select One:
a. accounted for separately outside of the current inventory system.
b. a C item
c. An A item
d. a B item
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Answer #1

ABC Analysis is a method of categorising Inventory based on thrie volume of sale. It is not based on the value of sale. Thus a Product, which is an important component of company's sales must be contributing enough to the company's sales. Therefore, we will categorise it under category A irrespective of its Value.

Thus, Option c i.e "an A Item" is the correct answer.

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