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LIMITATIONS OF ABC ANALYSIS
However ABC analysis is a basic tool for exercising selective control over many inventory items, it does not, in its current form, allow precise consideration of all relevant troubles of inventory management. For illustration, a never-ending trouble in inventory management is that of sufficiently handling thousands of low-value `C' items. Low-value purchases often require more items and thereby decrease the time allowance accessible to purchasing personnel for value analysis, vendor investigation, and other `B' items.
Moreover, if ABC analysis is not periodically evaluated and updated, the very approach of control might be defeated. For illustration,`C' items similar to diesel oil in a firm, will become most high-value items throughout power crisis should, hence, deserve more attention, though this point might be overlooked when classification of items is not evaluated and updated.
Disadvantages of ratio analysis 1) False results: ratios are based upon the financial statement. In case financial ratio is incorrect or the data upon which ratios are based
State the steps for Standard costing system standard costing system involves the following steps 1) Setting-up of standards for each element of cost: standards should be s
Activity Based Costing (ABC) differs from Absorption Costing (AC) in the manner in which overheads are charged to units. ABC charges overheads to units based on their proportion
Illustrate the General Design of Waste heat boilers The boiler system shall be made up of a fire tube type heat exchanger, a steam drum with relief valve internals, risers and
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The Rohr Company’s old equipment for making subassemblies is worn out. The company is considering two courses of action: (a) Completely replacing the old equipment with new equipme
The case of variable quantity discounts In practice, suppliers may offer different discounts for different quantities purchased. For illustration: Segment Quantity
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