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March 30, 2017

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5. All of the following statements about ABC analysis are true except:
A. Inventory may be categorized by measures other than dollar volume
B. It categorizes on-hand inventory into 3 groups based on dollar volume
C. It is an application of the Pareto Principle.
D. It states that all items require the same degree of control
E. It states that there are the critical few and the trivial many inventory items

Based on the research I did, I found support for both B,C, and E. Therefore, I think that both A and D could be correct because (a) ABC is based on annual dollar volume and (d) ABC states that C items require less control than A and B items. However, only one can be the correct answer.

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