Question
A large portion of fruits and veggies grown in the U.S. don't meet cosmetic standards - the crooked carrot, the curvy cucumber, the undersized apple
A large portion of fruits and veggies grown in the U.S. don't meet cosmetic standards - the crooked carrot, the curvy cucumber, the undersized apple - usually causing them to go to waste. UglyFoods is a business that buys and distributes these food items. UglyFoods is running a warehouse with several SKUs that vary along different metrics. To date, the company has been treating all SKUs the same, but now they are growing and need to make sure this choice is still right.
The operations manager asks you to analyze a sample of representative SKUs and see if segmentation is necessary for better management of operational costs. He adds that the most important factors that drive operational costs are the value and weight of SKUs. He gives you the following data:
SKU # Items Value ($/item) Weight (lb/item)
A 220 67 51
B 225 4 58
C 245 20 64
D 145 7 46
E 230 26 41
F 240 75 50
The Operations Manager likes your answer and thanks you for the analyses. He then asks you to do the ABC analysis. The manager adds that the company typically does ABC analysis such that the A segment (all A items togehter) accounts for at least 70% of value, B segment for at least 15% and C segment for at most 10% of value. Imagine, you want to first do the ABC analysis based on SKU value.
- What percentage of the total number of items is accounted for by SKUs in segment B?
- What percentage of the total value of inventory is accounted for by SKUs in segment B?
- What percentage of the total weight of inventory is accounted for by SKUs in segment B?
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