Question

L. Houts Plastics is a large manufacturer of injection-molded plastics in North Carolina. An investigation of the company's manufacturing facility in Charlotte yields the information presented in the table below. How would the plant classify these items according to an ABC classification system? (Round dolor volume to the nearest whole number and percentage of dollar volume to two decimal places.) 

L. Houts Plastics Charlotte Inventory Levels 

Item Code	Avg. Inventory (units)	Value ($lunit)	Dollar Volume	%of Dollar Volume
1289	420	3.75	◻	◻
2347	300	4.00	1,200	34.77
2349	120	2.50	300	8.69
2363	70	1.80	◻	◻
2394	60	1.75	105	3.04
2395	25	2.00	◻	◻
6782	20	1.15	23	0.67
7844	12	2.05	25	0.71
8210	8	2.00	◻	◻
8310	7	2.00	14	0.41
9111	6	3.00	18	0.52

 For the following three questions, consider only items 1289, 2349, and 8210 from the above table for relative classification (these are some of the items for which you computed the metrics) 

Based on the percentages of dollar volume, item number 1289 should be classified as _______ 

Item number 2349 should be classified as _______ 

Item number 8210 should be classified as _______ 

Answer 1

L.Houts Plastics Charlotte Inventory Levels

Item Code	Avg. Inventory (Units)	Value ($/unit)	Dollar Volume	% of Dollar Volume
1289	420	3.75	1,575	45.63
2347	300	4.00	1,200	34.77
2349	120	2.50	300	8.69
2363	70	1.80	126	3.65
2394	60	1.75	105	3.04
2395	25	2.00	50	1.45
6782	20	1.15	23	0.67
7844	12	2.05	25	0.71
8210	8	2.00	16	0.46
8310	7	2.00	14	0.41
9111	6	3.00	18	0.52
			3,452

Calculation: The incomplete values have been calculated. The Dollar Volume is calculated by multiplying the respective Avg. Inventory and Value. The % of Dollar Volume is calculated by computing the Dollar Volume as a percentage of 3,472 (The total of Dollar Volume)

Question 1: Based on the percentages of Dollar Volume, item number 1289 should be classified as

Answer: A

Reason: The percentage of Dollar Volume of this item is high at 45.63%. This means that this item is extremely important for the manufacturing process. Items of high importance are classified under A.

Question 2: Item number 2349 should be classified as

Answer: B

Reason: The percentage of Dollar Volume of this item is moderate at 8.69%. This means that this item is only moderately important for the manufacturing process. Items of moderate importance are classified under B.

Question 3: Item number 8210 should be classified as

Answer: C

Reason: The percentage of Dollar Volume of this item is low at 0.46%. This means that this item is relatively unimportant for the manufacturing process. Items of low importance are classified under C.