The following table contains figures on the monthly volume and unit costs for a
ID: 345281 • Letter: T
Question
The following table contains figures on the monthly volume and unit costs for a random sample of 16 items from a list of 2,000 inventory items at a health care facility: Item Unit Cost Usage Item Unit Cost K34 K35 K36 M10 M20 Z45 F14 F95 $10 25 36 16 20 80 20 30 200 600 150 25 80 200 300 800 F99 D45 D48 D52 D57 N08 20 10 12 15 40 30 16 10 Usage 60 550 90 110 120 40 500 30 P09 a. Develop an A-B-C classification for these items Item K34 | (Click to select) K35 | (Click to select) K36 | (Click to select) M10 | (Click to select) M201 (Click to select) 245 | (Click to select) F14 | (Click to select) F95 | (Click to select) F99 | (Click to select) D45 | (Click to select) D48 | (Click to select) D52 | (Click to select) D57 | (Click to select) N08 | (Click to select) P05 | (Click to select) P09 | (Click to select) CategorExplanation / Answer
Please find below table highlighting A-B-C classification for each item:
Item no
Unit cost($)
Usage
Total value($)
Cumulative value($)
Percentage of Cumulative value ( $)
ABC Classification
F95
30
800
24000
24000
25.50
A
Z45
80
200
16000
40000
42.49
A
K35
25
600
15000
55000
58.43
A
P05
16
500
8000
63000
66.93
A
F14
20
300
6000
69000
73.30
A
D45
10
550
5500
74500
79.15
A
K36
36
150
5400
79900
84.88
B
D57
40
120
4800
84700
89.98
B
K34
10
200
2000
86700
92.11
C
D52
15
110
1650
88350
93.86
C
M20
20
80
1600
89950
95.56
C
F99
20
60
1200
91150
96.83
C
N08
30
40
1200
92350
98.11
C
D48
12
90
1080
93430
99.26
C
M10
16
25
400
93830
99.68
C
P09
10
30
300
94130
100.00
C
TOTAL:
94130
Following formula and methods have been adopted :
a)We have calculated “Total Value “ for each item = Usage x Unit cost ( $)
b)Upon calculating “Total value “ for each item, we have arranged the items in descending order of Total Value
c)Upon arranging the items in descending order of total value , we have calculated Cumulative value against each item
Cumulative value against each item is equal to sum of Total values of all items starting from beginning upto that item
d)Percentage of Cumulative value for any item = Total value / Cumulative x 100
e)For purpose of classification ,
Let us assume that all items whose percentage of cumulative values summed up upto 80% are A class items
All items ( beyond A class items ) whose percentage of cumulative values sum up upto 90% are B class items
All items ( beyond B class items ) whose percentage of cumulative values sum up upto 100 % are C class items
Accordingly , there are :
6 numbers A class items -F95, Z45, K35 , P05, F14 , D45
2 numbers B class items – K 36,D57
Item no
Unit cost($)
Usage
Total value($)
Cumulative value($)
Percentage of Cumulative value ( $)
ABC Classification
F95
30
800
24000
24000
25.50
A
Z45
80
200
16000
40000
42.49
A
K35
25
600
15000
55000
58.43
A
P05
16
500
8000
63000
66.93
A
F14
20
300
6000
69000
73.30
A
D45
10
550
5500
74500
79.15
A
K36
36
150
5400
79900
84.88
B
D57
40
120
4800
84700
89.98
B
K34
10
200
2000
86700
92.11
C
D52
15
110
1650
88350
93.86
C
M20
20
80
1600
89950
95.56
C
F99
20
60
1200
91150
96.83
C
N08
30
40
1200
92350
98.11
C
D48
12
90
1080
93430
99.26
C
M10
16
25
400
93830
99.68
C
P09
10
30
300
94130
100.00
C
TOTAL:
94130
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