Question

Policies based on ABC analysis might include investing __________.A. extra care in forecasting for C items. B. more in supplier development for A items. C. more in inventory security for C items. D. the most time and effort verifying the accuracy of records for B items.

Answer 1

Answer:

Correct option is B

more in supplier development for A items.

Explanation:

In materials management, the ABC analysis is an inventory categorization technique. ABC analysis divides an inventory into three categories—"A items" with very tight control and accurate records, "B items" with less tightly controlled and good records, and "C items" with the simplest controls possible and minimal records.

The ABC analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost, while also providing a mechanism for identifying different categories of stock that will require different management and controls.