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
Avg. Inventory (units)
% of Dollar Volume
1 comma 200
3 comma 304
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ABC classification system:
It is the system used for inventory control process. It refers to the three classes of items used in the system. The items are classified as shown below:
A - class items:
These are items which are most important and critical for the business. A - class items account for about 60-80% of the annual dollar value. It generally accounts for 10-20% of the number of items in inventory.
B - class items:
These are items which have moderate importance for the business. B - class items account for about 10-15% of the annual dollar value. It generally accounts for 30-40% of the number of items in inventory.
C - class items:
These are items which have least importance for the business. C - class items account for about 5-10% of the annual dollar value. It generally accounts for 50-60% of the number of items in inventory.
Classification of items based on ABC system:
The given problem is solved using MS Excel.
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