In ABC inventory analysis, Class A items typically represent what percentage of total inventory value?
Correct Answer
D) 70-80%
In ABC analysis, Class A items typically represent about 20% of inventory items but account for 70-80% of the total inventory value, requiring the most careful management and control.
Why This Is the Correct Answer
Class C items in ABC analysis follow the Pareto Principle (80/20 rule), where approximately 20% of inventory items account for 70-80% of the total inventory value. These high-value items require the most stringent management controls, frequent monitoring, and careful procurement planning. This percentage reflects the typical distribution where a small number of expensive or critical items dominate the total inventory investment.
Why the Other Options Are Wrong
Option A: 20-30%
40-50% represents a more moderate concentration that would be closer to Class B items, which typically account for about 30% of items and 15-25% of value, not the high-value Class A category.
Option B: 90-95%
90-95% is unrealistically high and would indicate an extreme concentration that rarely occurs in practical inventory management, exceeding typical Pareto Principle applications.
Option C: 40-50%
20-30% is too low and would represent a poor concentration of value, not reflecting the typical Pareto distribution where high-value items should account for the majority of inventory investment.
Memory Technique
Remember 'A-80': Class A items account for approximately 80% of inventory value, making them the 'A-team' that requires top attention.
Reference Hint
Business and Finance chapter covering inventory management and ABC analysis methods
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