Ralph Janaro simply does not have time to analyze all of the items in his company's inventory. As a young manager, he has more important things to do. The following is a table of six items in inventory along with the unit cost and the demand in units.
Identification Code
XXI
B66
3CPO
33CP
R2D2
RMS
Unit Cost ($)
5.84
5.40
1.12
74.54
2.00
2.08
Demand in Units
1,200
1,110
896
1,104
1,110
961
(a) Find the total amount spent on each item during the year. What is the total investment for all of these?
(b) Find the percentage of the total investment in inventory that is spent on each item.
(c) Based on the percentages in part (b), which item(s) would be classified in categories A, B, and C using ABC analysis?
(d) Which item(s) should Ralph most carefully control using quantitative techniques?