Develop an abc classification system for the ten items

Question

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

J8            2,500                     $5

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 given numerical problem and illustrate step by step calculation.