The correct answer is A. Small number of items with large rupee investment.
ABC analysis is a method of inventory control in which items are classified into three categories: A, B, and C. Items in category A are the most important items, accounting for the majority of the value of inventory. Items in category B are less important, accounting for a smaller percentage of the value of inventory. Items in category C are the least important, accounting for a very small percentage of the value of inventory.
The ABC analysis method is based on the Pareto principle, which states that 80% of the effects come from 20% of the causes. In the context of inventory control, this means that 80% of the value of inventory comes from 20% of the items.
The ABC analysis method can be used to improve inventory management by focusing attention on the most important items. By doing so, businesses can reduce costs associated with carrying inventory, such as storage costs and obsolescence costs.
Here is a brief explanation of each option:
- Option A: Small number of items with large rupee investment. This is the correct answer. Items in category A are the most important items, accounting for the majority of the value of inventory.
- Option B: Large number of items with large rupee investment. This is not the correct answer. Items in category B are less important, accounting for a smaller percentage of the value of inventory.
- Option C: Large number of items with small money investment. This is not the correct answer. Items in category C are the least important, accounting for a very small percentage of the value of inventory.
- Option D: Very high quality items. This is not the correct answer. The ABC analysis method is not based on the quality of items.