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What are the classified different stock items?
The ABC system of inventory management
Various stock items are classified as like:
a. High value (A)
b. Medium value (B)
c. Low value (C)
Higher value items are reviewed more often and controlled through a greater extent than low value things. This is since better stock control of high value items will reduce cash tied up unnecessarily into high value raw material or finished goods stock, supporting more effectual cash flow management for the organisation. It is an illustration of a periodic inventory system.
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A large supplier of electronic components has decided to control the inventory of a certain item by a periodic review, order up to R policy. The mean demand rate for this item is 5
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