Lynne Chappell manages the inventory of supplies in a large hospital. To determine which items should be closely monitored, Lynne decided to use the ABC classification scheme to group the items on the basis of their value. As the following table shows, she took a random sample of 20 items and recorded the annual usage and unit cost of each. How should each item be classified?
Problem 7
Lynne Chappell manages the inventory of supplies in a
large hospital. To determine which items should be closely
monitored, Lynne decided to use the ABC classification scheme
to group the items on the basis of their value. As
the following table shows, she took a random sample of
20 items and recorded the annual usage and unit cost of
each. How should each item be classified?
Inventory Item Unit cost(in U.S.dollars) AnnualUsage
P21 $80 800
A12 $400 70
K43 $50 100
S54 $60 90
C25 $50 130
D76 $30 170
E27 $20 200
F38 $300 90
H19 $520 120
Q10 $10 100
R82 $20 80
G65 $80 70
L71 $220 200
M94 $70 80
V45 $15 60
T62 $30 180
I17 $20 80
W22 $300 90
O37 $700 85
N88 $5 100
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