**Title: Understanding ABC Classification in Inventory Management****Introduction:**L. Houts Plastics, a manufacturer of injection-molded plastics in North Carolina, analyzed their inventory levels at their Charlotte facility. The goal was to classify items based on the ABC classification system, which helps in prioritizing inventory management efforts by categorizing items according to their significance.**L. Houts Plastics Charlotte Inventory Levels:**The table below provides an analysis of various inventory items:| **Item Code** | **Avg. Inventory (units)** | **Value ($/unit)** | **Dollar Volume** | **% of Dollar Volume** ||---------------|----------------------------|--------------------|-------------------|------------------------|| 1289 | 360 | 4.00 | 1,440 | 36.20 || 2347 | 300 | 4.00 | 1,200 | 30.56 || 2349 | 120 | 2.50 | 300 | 9.05 || 2363 | 75 | 1.50 | 112.5 | 3.38 || 2394 | 60 | 1.75 | 105 | 3.17 || 2395 | 35 | 2.00 | 70 | 2.12 || 6782 | 20 | 1.15 | 23 | 0.69 || 7844 | 12 | 2.05 | 24.6 | 0.74 || 8210 | 7 | 2.00 | 14 | 0.42 || 9111 | 6 | 3.00 | 18 | 0.54 |**Total Inventory Dollar Volume: 3,976.10****Classification Considerations:**For ABC classification, items are typically divided into three categories based on their significance:- **A**: High-value items, comprising a small percentage of the total inventory but a large percentage of dollar volume.- **B**: Moderate-value items, with moderate share in inventory and dollar volume.- **C**: Low-value items, comprising a

Inventory is a means to an end in any association occupied with the creation, deal, or exchanging of items. Inventory is held in different structures including Raw Materials, Semi-Finished Goods, Finished Goods, and Spares. Each unit of inventory has a financial worth and is viewed as a resource of the association regardless of where the inventory is found or in which structure it is accessible. Indeed, even a piece has lingering financial worth joined to it.Answer: Item code 1289: Dollar volume= value * avg inventory = 360*4 = $1440 % dollar volume = Dollar volume / total dollar volume = 1440/3315.1 = 43.43% (Answer) Item code 2363: Dollar volume= value * avg inventory = 75*1.5 = $113(Answer) % dollar volume = Dollar volume / total dollar volume = 113/3315.1 = 3.40% (Answer) Item code 2395: Dollar volume= value * avg inventory = 35*2 = $70(Answer) % dollar volume = Dollar volume / total dollar volume = 70/3315.1 = 2.11% (Answer) Item code 8210: Dollar volume= value * avg inventory = 5*1.60 = $8(Answer) % dollar volume = Dollar volume / total dollar volume = 8/3315.1= 0.24% (Answer) Whether an item would be considered an A, B, or C class item would depend on the cut-off limit set for A, B, and C class items. For this purpose, let us set the following cut off-limits : Items no.constituting top 80% of Total value = A class Items no.constituting top 80% - 90% of total value = B class Items no.constituting top 90% - 100% of total value = C class Item 1289 will be part of items constituting A class items Item 2349 belong to top 43.43% + 36.20 % + 9.05 % = 88.68% of items and therefore should fall under category of 80% - 90% by total value. Hence, item no.2349 should be considered a B class item Item 8210 would belong to the last 10% ( i.e. 90% - 100% by total value ) and should therefore be categorized as C class item ITEM NUMBER 1289SHOULD BE CLASSIFIED AS A ITEM NUMBER2349 SHOULD BE CLASSIFIED AS B ITEM NUMBER8210 SHOULD BE CLASSIFIED AS C