Question

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

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

Answer 1

Answer: (A)

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.