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 dollar 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) (Sjunit)me Value % of Dollar 1289 2347 2349 2363 2394 2395 6782 3.25 4.00 2.50 1.80 1.75 1.75 1.15 2.05 1.60 2.00 3.00 37.95 9.49 120 3.32 0.73 0.78 8210 8310 9111 0.44 0.57 18 3,162

For the following three questions, 1289, 2349, and 8210 from the above table for relative classification.

Based on the percentage of the dollar volume, item number 1289 should be classified as A, B, or C?

Item number 2349 should be classified as A, B, or C?

Item number 8210 should be classified as A, B, or C?

Answer 1

Item Code	Avg. Inventory (units)	Value ($/unit)	Dollar Volume	% of Dollar Volume	Cumulative % Dollar Volume
1289	400	3.25	1,300	41.12	41.12
2347	300	4.00	1,200	37.95	79.07
2349	120	2.50	300	9.49	88.56
2363	60	1.80	108	3.42	91.97
2394	60	1.75	105	3.32	95.29
2395	35	1.75	61	1.94	97.23
6782	20	1.15	23	0.73	97.96
7844	12	2.05	25	0.78	98.73
8210	5	1.60	8	0.25	98.99
8310	7	2.00	14	0.44	99.43
9111	6	3.00	18	0.57	100.00
			3,162

Calculations

Item Code Avg. Inventory (units) Value (Sunit) Dollar Volume % of Dollar Volume Cumulative % Dollar Volume 2 1289 4 2347 5 2349 6 2363 7 2394 82395 6782 10 7844 11 8210 12 8310 13 9111 3.25 4 2.5 E3*100/SES14 300 120 -C4*D4 -C5*D5 -C6*D6 F3 -F4+G3 -F5+G4 E5*100/SE$14 E6*100/SE$14 E7*100/SES14 F7+G6 E8*100/SES14 35 20 12 1.75 1.75 1.15 2.05 F8+G7 -C9*D9 -C10 D10 -C11 D11 -C12*D12 -C13*D13 SUM(E3 E13) -E10* 100 SE$14 F10 G9 E11*100/SE$14 E12*100/SES14 F12+G11 E13 100/SES14 F13+G12 F11+G10 14

1289 is within the first 80% of the cumulative dollar volume. So, the classification should be A.

2349 is within the next 15% of the cumulative dollar volume. So, the classification should be B.

8210 is within the last 5% of the cumulative dollar volume. So, the classification should be C.