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Question

In ABC inventory management system, class A items may require _______________.

A
Higher Safety Stock
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B
Frequent Deliveries
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C
Periodic Inventory system
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D
Updating of Inventory records
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Solution

The correct option is B Higher Safety Stock
ABC analysis is a technique of inventory management. In this method, inventory is categorized in to A, B and C class depending on their importance.
A category includes those inventory which are very important to the organization and consist of 70-80% of inventory value but only 10-20 % of the quantity.
B category includes those inventory which are of moderate importance to the organization and consist of 20-30% of inventory value but only 20-30 % of the quantity.
C category includes those inventory which are of lesser important to the organization and consist of only 10-20% of inventory value but records 70-80 % of the quantity.

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