The correct answer is: A. At best Control
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 and account for the majority of the value of inventory. Items in category B are less important and account for a smaller percentage of the value of inventory. Items in category C are the least important and account for a very small percentage of the value of inventory.
ABC analysis 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.
By classifying items into A, B, and C categories, ABC analysis allows businesses to focus their attention on the most important items. This can lead to significant cost savings, as businesses can reduce the amount of inventory they carry and the amount of time they spend managing inventory.
Here is a brief explanation of each option:
- A. At best Control
ABC analysis is a method of inventory control that can help businesses to reduce costs and improve efficiency. By classifying items into A, B, and C categories, businesses can focus their attention on the most important items and reduce the amount of inventory they carry.
- B. Always better Control
This option is incorrect because ABC analysis is not always the best method of inventory control. For example, if a business has a large number of low-value items, it may be more efficient to use a different method of inventory control, such as a first-in, first-out (FIFO) system.
- C. Average better Control
This option is incorrect because ABC analysis is not based on averages. Instead, it is based on the Pareto principle, which states that 80% of the effects come from 20% of the causes.
- D. All best control
This option is incorrect because there is no one-size-fits-all method of inventory control. The best method of inventory control for a particular business will depend on a number of factors, such as the type of business, the size of the business, and the cost of inventory.