CIM ABC Analysis & Classification 2

Question 1

A company finds that 5% of its SKUs account for 70% of annual inventory value. How should these items be classified?

Accepted Answer

Class A — high value, tight control

Answer

Items representing the top tier of inventory value (typically 70-80%) are classified as Class A and require the most rigorous control.

Question 2

Which metric is primarily used to rank SKUs when performing a traditional ABC analysis?

Accepted Answer

Annual dollar usage (price × annual demand)

Answer

Annual dollar usage — calculated as unit cost multiplied by annual demand — is the standard ranking metric in ABC analysis.

Question 3

In ABC analysis, Class C items typically represent what share of annual inventory value?

Accepted Answer

5–10%

Answer

Class C items usually account for only about 5–10% of total annual inventory value despite often being the most numerous SKUs.

Question 4

A warehouse manager wants to reduce cycle count frequency for low-priority items. Which ABC class should be counted least often?

Accepted Answer

Class C

Answer

Class C items carry the least inventory value risk, so they require the lowest cycle count frequency.

Question 5

Which of the following best describes a limitation of traditional single-criterion ABC analysis?

Accepted Answer

It ignores item lead time, criticality, and supply risk

Answer

Single-criterion ABC analysis based only on dollar usage ignores other important factors like lead time, scarcity, and operational criticality.

(CIM) Certified Inventory Manager Practice Test