Saturday, August 30, 2008

ABC CLASSIFICATION IN INVENTORY


Classification of ABC is classification of inventory being based on principle the critical few and trivial many. This means, classification of ABC focused control of inventory at valuable inventory type of height. Inventory divided into three classes, that is: class a, class B, and class C. From existence of the class, known class inventory A to get attention is more serious to compare to inventory in class B and class C. However, does not mean class B and class C is not paid attention but it’s (the control not as tight for class A.
Class A represents approximately 70% from inventory value total with number of 20% from inventory item total. Twenty % becomes class value percentage B with number of around 30% item. While class C only represent 10% inventory value total with number of items 50%. The percentages, in its (the existence not absolute because in exercise is more depends on company policy. Which is absolute here is stages; steps how classification of ABC done. First step, calculates annual volume of dollar as result of multiplication of annual volume with the price of per unit. Second, compiles annual volume of dollar in the biggest or inversed pyramid to smallest.
Third, calculates annual volume of cumulative dollar. Fourth, knows cumulative percentage from every annual volume of cumulative dollar. Fifth, classifies A, B, C successively each of approximately 70%, 20%, and 10% from the top (of). Based on the five steps, known inventory we to classify applies classification of ABC. So only one-step again towards equipment of classification ABC is exercise. Yes, exercise. Emmh is not wrong again, exercise correctness.

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