Which of the Following Statements About ABC Analysis Is FALSE

question 207

Multiple Choice

Which of the following statements about ABC analysis is FALSE?

• A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.
• B) In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have.
• C) In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items.
• D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
• E) Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis.

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Definitions:

Competitive Landscape

The analysis of factors such as competitors, market conditions, and customer preferences within an industry.

Product Life Cycle

The stages a product goes through from development and introduction to the market, growth in sales, maturity, and eventually decline and withdrawal from the market.

Supply Chain Responsiveness

The agility of a supply chain in adapting and responding to changes in demand, supply, and other external factors.

Implied Uncertainty

The level of risk or doubt inherent in decision-making due to lack of precise information.