Question

Which of the following techniques analyzes all incremental costs associated with acquiring and carrying particular items of inventory?

a. cyclical reordering
b. reorder point analysis
c. EOQ models
d. ABC analysis

Answer 1

ABC analysis is the technique that analyzes all incremental costs associated with acquiring and carrying particular items of inventory.

Step-by-step explanation:

The technique that analyzes all incremental costs associated with acquiring and carrying particular items of inventory is ABC analysis. ABC analysis categorizes inventory items into three categories based on their value and importance:

1. A category: High-value items with low demand frequency. These items should be closely monitored and tightly controlled.
2. B category: Moderate-value items with moderate demand frequency. These items should be managed with a balance between control and flexibility.
3. C category: Low-value items with high demand frequency. These items require less attention and can be managed with a more relaxed approach.

By analyzing the costs associated with each category, businesses can optimize their inventory management and make informed decisions.