Given the Information Below, Conduct an ABC Analysis and Determine

question 87

Essay

Given the information below, conduct an ABC analysis and determine which items should be classified as A, B, and C. $\begin{array}{|c|r|r|}\hline\text { SKU } & \text { Annual Usage } & \text { Item Value (\$) } \\\hline \text { A } & 2,800 & 0.22 \\\hline \mathrm{B} & 300 & 50.00 \\\hline \mathrm{C} & 275 & 11.00 \\\hline \mathrm{D} & 700 & 8.00 \\\hline \mathrm{E} & 45 & 400.00 \\\hline \mathrm{F} & 1,250 & 0.80 \\\hline \mathrm{G} & 2,000 & 0.60 \\\hline\end{array}$

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Definitions:

Long-run Equilibrium

A state in which all factors of production can vary, and economic agents have fully adjusted to any changes, leaving no incentive for further adjustments.

Perfectly Competitive Market

An economic market setup in which there are numerous buyers and sellers dealing in identical products with no obstacles for entering or leaving the market.

Long-run Equilibrium

The state in which all factors of production and costs are variable, and firms make neither excess profit nor losses, indicating stability in the market.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, resulting in firms being price takers.