In the ABC stock plan, Category C accounts for what percentage of the dollar value and what percentage of items?

In the ABC stock plan, Category C accounts for what percentage of the dollar value and what percentage of items?

• A. Category C accounts for only 10% to 15% of the dollar value but makes up 75% of the items.
• B. Category C accounts for a larger share of dollar value than items.
• C. Category C accounts for 25% of the dollar value and 50% of the items.
• D. Category C accounts for 60% of the dollar value and 25% of the items.

Answer: (A)

In ABC analysis, items are ranked by how much they contribute to annual consumption value and how many different items there are. Category C represents the large number of low-value items that, taken together, contribute only a small portion of the total value but make up most of the item quantity. The idea is that you don’t need tight controls on every inexpensive item because, while there are many of them, their individual and collective value is small. So the typical pattern is that Category C accounts for a small slice of the dollar value (about 10–15%) while comprising a large majority of the items (roughly 75%). The exact percentages can vary by organization, but this imbalance—low value per item yet many items—is the hallmark of Category C. The other options describe distributions where Category C would hold a larger share of value or a more balanced split, which doesn’t fit the usual ABC approach.

In ABC analysis, items are ranked by how much they contribute to annual consumption value and how many different items there are. Category C represents the large number of low-value items that, taken together, contribute only a small portion of the total value but make up most of the item quantity. The idea is that you don’t need tight controls on every inexpensive item because, while there are many of them, their individual and collective value is small. So the typical pattern is that Category C accounts for a small slice of the dollar value (about 10–15%) while comprising a large majority of the items (roughly 75%). The exact percentages can vary by organization, but this imbalance—low value per item yet many items—is the hallmark of Category C. The other options describe distributions where Category C would hold a larger share of value or a more balanced split, which doesn’t fit the usual ABC approach.