Problem:
Boreki Enterprise has the following 10 items in inventory. CEO Theodore Boreki asks you to divide these items into an ABC classification:
|
Item
|
Annual Demand
|
Cost/Unit
|
|
|
|
A2
|
3,000
|
$50
|
|
|
|
B8
|
4,000
|
$12
|
|
|
|
C7
|
1,500
|
$45
|
|
|
|
D1
|
6,000
|
$10
|
|
|
|
E9
|
1,000
|
$20
|
|
|
|
F3
|
500
|
$500
|
|
|
|
G2
|
300
|
$1,500
|
|
|
|
H2
|
600
|
$20
|
|
|
|
I5
|
1,750
|
$10
|
|
|
Required:
Question 1) Develop an ABC classification system for the 10 items.
Question 2) How can Boreki use this information?
Question 3) Boreki reviews the classification and then places item A2 into the A category. Why might he do so?
Solve the problem and show all work.