MAQ Corporation, a major producer of consumer electronics equipment, is currently faced with a rapidly growing product
Question:
MAQ Corporation, a major producer of consumer electronics equipment, is currently faced with a rapidly growing product line and its associated inventory problems. MAQ's president, Mary Semerod, has decided to initiate a program to analyze the company's inventory requirements utilizing different inventory techniques. The first phase of this program consists of an ABC analysis of the company's product line (shown in the following table). Ms. Semerod has encountered difficulties in deciding on the appropriate criteria to use in the classification and in developing appropriate cutoff levels for each class of inventory. To solve her dilemma, Ms. Semerod has contracted the services of a logistics consulting firm to perform the inventory analysis.
a. If you were employed by the consulting firm, how would you construct your method of analysis?
b. What criteria would you use?
c. What would the cutoff levels be? Be sure to provide explanations of the reasoning supporting your decisions.
Step by Step Answer:
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw