ABC analysis is based upon the principle that:
A) all items in inventory must be monitored very closely.
B) there are usually a few critical items, and many items that are less critical.
C) an item is critical if its usage is high.
D) more time should be spent on class "C" items because there are many more of them.
E) as with grade distributions in many MBA courses, there should be more medium-level "B" items than either "A" or "C" items.

Question

Quizplus · Accepted Answer

ABC analysis categorizes inventory items into three groups based on their level of importance. Group A consists of the most critical items that account for a high percentage of usage or cost, while group C consists of the least critical items that account for a low percentage of usage or cost. Group B consists of items that fall in between. Therefore, the principle of ABC analysis is that there are usually a few critical items (group A) and many items that are less critical (group B and C), making B the best choice.

ABC Analysis Is Based Upon the Principle That