Problem 12.1L. 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? ​(Rounddollar volume to the nearest whole number and percentage of dollar volume to two decimal​ places.)L. Houts Plastics Charlotte Inventory LevelsItem CodeAvg. Inventory​ (units)Value​($/unit)DollarVolume​% of Dollar Volume12893803.75nothingnothing23473004.001 comma 20036.3223491202.503009.082363751.80nothingnothing2394601.751053.182395251.75nothingnothing6782201.15230.707844122.05250.748210101.60nothingnothing831072.00140.42911163.00180.543 comma 304Enter your answer in the edit fields and then click Check Answer.

Question
Asked Feb 6, 2019
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Problem 12.1

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)

Value
​($/unit)

Dollar
Volume

​% of Dollar Volume
1289
380

3.75

nothing

nothing
2347
300

4.00

1 comma 200

36.32
2349
120

2.50

300

9.08
2363
75

1.80

nothing

nothing
2394
60

1.75

105

3.18
2395
25

1.75

nothing

nothing
6782
20

1.15

23

0.70
7844
12

2.05

25

0.74
8210
10

1.60

nothing

nothing
8310
7

2.00

14

0.42
9111
6

3.00

18

0.54

3 comma 304

Enter your answer in the edit fields and then click Check Answer.

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Expert Answer

Step 1

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.

Step 2

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.

Step 3

Classification of items based on ABC system:

The given problem is solved using MS Excel.

Excel output:

 

 

 

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