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ABC Analysis Solved Example

The document presents an ABC analysis example for a company's items based on annual usage and cost. It details the steps to calculate annual consumption value, arrange items in descending order of value, and determine percentage contributions. The final classification categorizes items D, B, and A as 'A' items, C as 'B', and E as 'C'.

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balajieshu2006
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36 views2 pages

ABC Analysis Solved Example

The document presents an ABC analysis example for a company's items based on annual usage and cost. It details the steps to calculate annual consumption value, arrange items in descending order of value, and determine percentage contributions. The final classification categorizes items D, B, and A as 'A' items, C as 'B', and E as 'C'.

Uploaded by

balajieshu2006
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

ABC Analysis – Solved Example

Student Reference PDF

Problem:
A company uses the following items in a year. Find the ABC classification.
Item Annual Usage Cost per Unit (■)
A 500 20
B 300 50
C 1000 5
D 200 100
E 1500 2

Step 1: Calculate Annual Consumption Value (Quantity × Cost)


Item Qty Cost Annual Value (■)
A 500 20 10,000
B 300 50 15,000
C 1000 5 5,000
D 200 100 20,000
E 1500 2 3,000

Step 2: Arrange in Descending Order of Value


Item Annual Value (■)
D 20,000
B 15,000
A 10,000
C 5,000
E 3,000
Total Value = ■53,000

Step 3: Percentage Contribution


Formula: (Individual Value ÷ Total Value) × 100
Item Value (■) Percentage (%)
D 20,000 37.7%
B 15,000 28.3%
A 10,000 18.9%
C 5,000 9.4%
E 3,000 5.7%

Step 4: Final ABC Classification


Category Items
A D, B, A
B C
C E

Prepared for student learning use.

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