Your company has compiled the following data on the small set of products that comprise the specialty repair parts division. Perform ABC analysis on the data. Over which product do you suggest the firm keep the tightest control? Unit Cost SKU Annual Demand
$25 R11 125
$90 S22 55
$500 T33 100
$550 U44 150
$4 V55 2000
a) S22
b) R11
c) U44
d) V55
e) T33

c) U44

Explanation:

The computation is shown below:

A                                                 B           (A × B)     (dollar value ÷ total dollar value)

Unit Cost              SKU             Annual     Dollar    Dollar

                                                Demand    value     Percentage

$25                        R11              125           $3,125       2.1

$90                        S22            55            $4,950      3.3

$500                     T33            100            $50,000   33.65

$550                     U44            150            $82,500   55.53

$4                          V55            2000       $8,000     5.38

                                                                $148,575   100

As we can see from the above calculation, the u$4 has tighest control as it shows the high dollar percentage if we compared with others

hence, the correct option is c.

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