Your Company Has Compiled the Following Data on the Small

question 104

Essay

Your company has compiled the following data on the small set of products that comprise the specialty repair parts division. Perform ABC analysis on the data. Which products do you suggest the firm keep the tightest control over?
Explain.
$$\begin{array} { | c | c | c | } \hline \text { SKU } & \text { Annual Demand } & \text { Unit Cost } \\\hline \text { R11 } & 250 & \$ 250 \\\hline \text { S22 } & 75 & \$ 90 \\\hline \text { T33 } & 20 & \$ 60 \\\hline \text { U44 } & 150 & \$ 150 \\\hline \text { V55 } & 100 & \$ 75 \\\hline\end{array}$$

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Definitions:

Tax Gains

The financial gains attained from investments that are subject to taxation.

Acquisition

The process by which one company takes over another, either through the purchase of its shares or assets.

Operating Losses

Losses incurred from a company's everyday operational activities not offset by revenue.

Synergistic Benefits

The additional value created by combining two or more companies or assets, which is above what individual entities can generate on their own.