The following table provides a random sample of the unit values and annual demands of eight SKUs. SKU Code Unit Value Demand (units) A104 $0.02 D205 $2.60 X104 $4.80 U404 $2.50 L205 $0.36 S104 $0.84 X205 $4.35 L104 $0.23 4,500 30 25 2,500 1,040 380 70 250 Southern Markets Inc. is considering the use of ABC analysis to focus on the most critical SKUs in its inventory. a. Based on the percentage of dollar usage, which class should L205 belong to? Class b. Based on the percentage of dollar usage, which class should L104 belong to? Class
The following table provides a random sample of the unit values and annual demands of eight SKUs. SKU Code Unit Value Demand (units) A104 $0.02 D205 $2.60 X104 $4.80 U404 $2.50 L205 $0.36 S104 $0.84 X205 $4.35 L104 $0.23 4,500 30 25 2,500 1,040 380 70 250 Southern Markets Inc. is considering the use of ABC analysis to focus on the most critical SKUs in its inventory. a. Based on the percentage of dollar usage, which class should L205 belong to? Class b. Based on the percentage of dollar usage, which class should L104 belong to? Class
Chapter1: An Overview Of Strategic Marketing
Section1.2: Dollar Shave Club: The Company For Men
Problem 2C
Related questions
Question
![The following table provides a random sample of the unit values and annual demands of eight SKUs.
| SKU Code | Unit Value | Demand (units) |
|----------|------------|----------------|
| A104 | $0.02 | 4,500 |
| D205 | $2.60 | 30 |
| X104 | $4.80 | 25 |
| U404 | $2.50 | 2,500 |
| L205 | $0.36 | 1,040 |
| S104 | $0.84 | 380 |
| X205 | $4.35 | 70 |
| L104 | $0.23 | 250 |
Southern Markets Inc. is considering the use of ABC analysis to focus on the most critical SKUs in its inventory.
**a. Based on the percentage of dollar usage, which class should L205 belong to?**
\[ \text{Class} \: \_\_\_\_\_\]
**b. Based on the percentage of dollar usage, which class should L104 belong to?**
\[ \text{Class} \: \_\_\_\_\_\]
### Explanation
ABC analysis is an inventory categorization technique frequently used in materials management. It divides items into three categories (A, B, and C) based on their importance:
- **Class A:** The top 20% of items that account for 70-80% of the consumption value. These are the most valuable items.
- **Class B:** The next 30% of items that account for 15-25% of the consumption value.
- **Class C:** The last 50% of items that account for 5-10% of the consumption value. These are the least valuable items.
**Calculations:**
1. **Determine the total dollar value for each SKU:**
- **A104:** $0.02 * 4,500
- **D205:** $2.60 * 30
- **X104:** $4.80 * 25
- **U404:** $2.50 * 2,500
- **L205:** $0.36 * 1,040
- **S104:** $0.84 * 380
- **X205:** $4.35](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd9336e41-878d-447f-8d98-1ef6dee3d14b%2Fab2bc314-ac06-458c-849d-de8fe5d42c8f%2Fa2pzmtg.jpeg&w=3840&q=75)
Transcribed Image Text:The following table provides a random sample of the unit values and annual demands of eight SKUs.
| SKU Code | Unit Value | Demand (units) |
|----------|------------|----------------|
| A104 | $0.02 | 4,500 |
| D205 | $2.60 | 30 |
| X104 | $4.80 | 25 |
| U404 | $2.50 | 2,500 |
| L205 | $0.36 | 1,040 |
| S104 | $0.84 | 380 |
| X205 | $4.35 | 70 |
| L104 | $0.23 | 250 |
Southern Markets Inc. is considering the use of ABC analysis to focus on the most critical SKUs in its inventory.
**a. Based on the percentage of dollar usage, which class should L205 belong to?**
\[ \text{Class} \: \_\_\_\_\_\]
**b. Based on the percentage of dollar usage, which class should L104 belong to?**
\[ \text{Class} \: \_\_\_\_\_\]
### Explanation
ABC analysis is an inventory categorization technique frequently used in materials management. It divides items into three categories (A, B, and C) based on their importance:
- **Class A:** The top 20% of items that account for 70-80% of the consumption value. These are the most valuable items.
- **Class B:** The next 30% of items that account for 15-25% of the consumption value.
- **Class C:** The last 50% of items that account for 5-10% of the consumption value. These are the least valuable items.
**Calculations:**
1. **Determine the total dollar value for each SKU:**
- **A104:** $0.02 * 4,500
- **D205:** $2.60 * 30
- **X104:** $4.80 * 25
- **U404:** $2.50 * 2,500
- **L205:** $0.36 * 1,040
- **S104:** $0.84 * 380
- **X205:** $4.35
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
Recommended textbooks for you
Contemporary Marketing
Marketing
ISBN:
9780357033777
Author:
Louis E. Boone, David L. Kurtz
Publisher:
Cengage Learning
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Contemporary Marketing
Marketing
ISBN:
9780357033777
Author:
Louis E. Boone, David L. Kurtz
Publisher:
Cengage Learning
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,