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Inventory Classification Explanation

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4. You have been called in as a consultant to a large drugstore chain which has 24,000 inventory line items. Explain how inventory classification could help this company to better control its inventory. (20 points)

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Solution Summary

This posting gives you a step-by-step explanation of the use of inventory classification for better control in a drugstore chain with 24,000 items . The response also contains the sources used.

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Inventory classification can help a large drugstore chain having 24,000 inventory line items. Inventory classification can help this company to better control its inventory. Inventory classification is normally done by classifying inventory into three categories in accordance to their values. Alternately, classification can also be done accordance with their revenues. Group A has costly items (high revenue items) which may be only 10 to 20% of the total items but account for 50% of the total value of the items sold by stores. More control is exercised over these items than it is on other items. Group B has items which constitute 20 to 30% of the chain store items and represent around 30% of the ...

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