The correct answer is: ABC Analysis.
ABC analysis is a technique of material cost control which leads to low carrying cost as a result of low investment in inventory. It classifies items into three categories: A, B, and C. A items are the most important items, accounting for the majority of the cost of inventory. B items are less important items, accounting for a smaller percentage of the cost of inventory. C items are the least important items, accounting for a very small percentage of the cost of inventory.
ABC analysis helps businesses to focus their attention on the most important items, which can lead to significant cost savings. By focusing on A items, businesses can reduce the amount of inventory they carry, which can lower carrying costs. Additionally, businesses can improve their inventory management by focusing on A items, which can lead to fewer stockouts and lower costs associated with lost sales.
Here is a brief explanation of each option:
- A. ABC Analysis is a technique of material cost control which leads to low carrying cost as a result of low investment in inventory. It classifies items into three categories: A, B, and C. A items are the most important items, accounting for the majority of the cost of inventory. B items are less important items, accounting for a smaller percentage of the cost of inventory. C items are the least important items, accounting for a very small percentage of the cost of inventory.
- B. JIT Inventory System is a method of inventory management in which materials and components are delivered just as they are needed for production. This system can help to reduce inventory costs and improve efficiency. However, it can also be more difficult to manage and can lead to stockouts if there are any disruptions in the supply chain.
- C. VED Analysis is a technique for classifying items in inventory based on their value, urgency, and criticality. This information can be used to prioritize inventory items and to develop appropriate inventory management strategies.
- D. Perpetual Inventory System is a system of inventory management in which the inventory level is constantly updated. This can be done manually or by using a computer system. Perpetual inventory systems can help to improve accuracy and efficiency in inventory management.