Question 1:

David Alexander has compiled the following table of six items in inventory at Angelo Products, along with the unit cost and the annual demand in units:

Identification Code Unit Cost ($) Annual Demand (units)

XX1 5.84 1200

B66 5.40 1110

3CPO 1.12 896

33CP 74.54 1104

R2D2 2.00 1110

RMS 2.08 961

Use ABC analysis to determine which item(s) should be carefully controlled using a quantitative inventory technique and which item(s) should not be closely controlled.

Question 2:

L. Houts Plastics is a large manufacturer of injection-moulded plastics in Ontario. An investigation of the company's manufacturing facility in Mississauga yields the information presented in the table below. How would the plant classify these items according to an ABC classification system?

L. Houts Plastics Mississauga Inventory Levels

Item Code # Average Inventory (units) Value ($/unit)

1289 400 3.75

2347 300 4.00

2349 120 2.50

2363 75 1.50

2394 60 1.75

2395 30 2.00

6782 20 1.15

7844 12 2.05

8210 8 1.80

8310 7 2.00

9111 6 3.00