SMC Material Requirement Planning Questions

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Business Finance

Santa Monica College

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Running head: ABC ANALYSIS AND ROP 1

ABC Analysis and ROP
First and Last Name
Institution Affiliation
Date

ABC ANALYSIS AND ROP 2
Question 12.6 – ABC Analysis
The following is an ABC analysis of Lynn Fish's beauty product retail store.
Step 1: Study provided data on products.
ITEM
UNIT
DEMAND
NUMBER COST ($) (UNITS)
E102
4
800
D23
8
1200
D27
3
700
R02
2
1000
R19
8
200
S107
6
500
S123
1
1200
U11
7
800
U23
1
1500
V75
4
1500
Step 2: Determining the dollar value of the items. The dollar value of each item is estimated by
multiplying the demand and cost of each item individually.
Dollar Value = Demand x Unit Cost
ITEM
UNIT
DEMAND Dollar
NUMBER COST
(UNITS)
value
E102
$4.00
800 $3,200.00
D23
$8.00
1200 $9,600.00
D27
$3.00
700 $2,100.00
R02
$2.00
1000 $2,000.00
R19
$8.00
200 $1,600.00
S107
$6.00
500 $3,000.00
S123
$1.00
1200 $1,200.00
U11
$7.00
800 $5,600.00
U23
$1.00
1500 $1,500.00
V75
$4.00
1500 $6,000.00

The total of the inventory is also evaluated in this step.

ABC ANALYSIS AND ROP 3

Dollar
value
$3,200.00
$9,600.00
$2,100.00
$2,000.00
$1,600.00
$3,000.00
$1,200.00
$5,600.00
$1,500.00
$6,000.00
$35,800.00

Step 3: The inventory total helps to ...

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