SKU Code Unit Value Demand (Units) A104 $2.10 2,500 D205 $2.50 30 X104 $0.85 350 U404 $0.25 250 L205 $4.75 20 S104 $0.02 4,000 X205 $0.35 1,020 L104 $4.25 50

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter3: Introduction To Optimization Modeling
Section: Chapter Questions
Problem 1C
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Question

Southern Markets, Inc., is considering the use of ABC
analysis to focus on the most critical SKUs in its inventory.
Currently, there are approximately 20,000 different SKUs
with a total dollar usage of $10,000,000 per year.
a. What would you expect to be the number of SKUs and the
total annual dollar usage for A items, B items, and C items
at Southern Markets, Inc.?

The following table provides a random sample of the unit
values and annual demands of eight SKUs. Categorize
these SKUs as A, B, and C items.

SKU Code
Unit Value
Demand (Units)
A104
$2.10
2,500
D205
$2.50
30
X104
$0.85
350
U404
$0.25
250
L205
$4.75
20
S104
$0.02
4,000
X205
$0.35
1,020
L104
$4.25
50
Transcribed Image Text:SKU Code Unit Value Demand (Units) A104 $2.10 2,500 D205 $2.50 30 X104 $0.85 350 U404 $0.25 250 L205 $4.75 20 S104 $0.02 4,000 X205 $0.35 1,020 L104 $4.25 50
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ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,