Chapter 13, Problem 45P

The Aztec Company stock a variety of parts and materials it uses in its manufacturing processes. Recently, as demand for its finished goods has increased, management has had difficulty managing parts inventory: they frequently run out of some crucial parts and seem to have an endless supply of others. In an effort to control inventory more effectively, they would like to classify their inventory of parts according to the ABC approach. Following is a list of selected parts and the annual usage and unit value for each:

Classify the inventory items according to the ABC approach using dollar value of annual demand.