Your company management wants you to compare the list of materials for HML and ABC analysis. For ABC classification they set the following criteria; Items below SR 100000 annual consumption shall be considered as C-items, items between SR 100000 and SR 150000 shall be considered as B-items, and items above SR 150000 shall be considered as A- items For HML classification they set the following criteria; Items below unit price SR 50 shall be considered as L-items, items between SR 50 and SR 100 unit price shall be considered as M-items, and items above SR 100 unit price shall be considered as H-items. Based upon your analysis suggest which classification shall be better for the company so that inventory can be optimized. Justify your answer. Item Consumption (Units) Annual Price/unit SR H/M/L Consumption (SR) Annual A/B/C A 2000 40 B 3000 65 C 2500 90 D 2400 100 E 2300 85 F 2600 110 G 2700 35 H 2300 105 I 2200 130 J 2500 45
Your company management wants you to compare the list of materials for HML and ABC analysis.
For ABC classification they set the following criteria;
Items below SR 100000 annual consumption shall be considered as C-items,
items between SR 100000 and SR 150000 shall be considered as B-items,
and items above SR 150000 shall be considered as A- items
For HML classification they set the following criteria;
Items below unit price SR 50 shall be considered as L-items,
items between SR 50 and SR 100 unit price shall be considered as M-items,
and items above SR 100 unit price shall be considered as H-items.
Based upon your analysis suggest which classification shall be better for the company so that inventory can be optimized. Justify your answer.
|
Item |
Consumption (Units) Annual |
Price/unit SR |
H/M/L |
Consumption (SR) Annual |
A/B/C |
|
A |
2000 |
40 |
|
|
|
|
B |
3000 |
65 |
|
|
|
|
C |
2500 |
90 |
|
|
|
|
D |
2400 |
100 |
|
|
|
|
E |
2300 |
85 |
|
|
|
|
F |
2600 |
110 |
|
|
|
|
G |
2700 |
35 |
|
|
|
|
H |
2300 |
105 |
|
|
|
|
I |
2200 |
130 |
|
|
|
|
J |
2500 |
45 |
|
|
|
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