Inventory Classification Based on Annual Dollar Usage

Item Number Item Cost Annual Usage (Units) Annual Usage ($)
T604 $65.00 400 $26,000.00
J125 $5.40 4,600 $24,840.00
Y321 $31.50 600 $18,900.00
Y633 $3.50 3,500 $12,250.00
X221 $1.65 5,500 $9,075.00
M455 $5.25 1,500 $7,875.00
L242 $1.05 1,400 $1,470.00
K966 $0.29 3,800 $1,102.00
B886 $6.43 118 $758.74
W985 $0.73 810 $591.30

Total $102,862.04

% of Total Annual Dollar Usage

A items 79.71%
B items 16.48%
C items 3.81%
Total 100.00%
% of Total Annual Dollar UsageClassification by Annual Dollar Usage
25.28% A
24.15% A
18.37% A
11.91% A
8.82% B
7.66% B
1.43% C
1.07% C
0.74% C
0.57% C
Stages Items
Raw Materials:
Coffee beans
Chocolate chips

Work-in-Process:
Donut batter being fried

Coffee being brewed

Finished Goods:
Sandwiches
Muffins
Maintenance, Repair and
Operating Supplies:
Dishwashing soap
Toilet Paper
Example

Coffee beans and chocolate chips are dependent demand items. It is

driven by the demand for Tim Horton's products by customers.

Donut batter is usually fried and coffee being brewed are dependent
demand. These items are driven by the demand for finished goods
(donuts and coffee).

Sandwiches and Muffins are independent demand items because their

demand is driven by customer demand.

Dishwashing soap and Toilet Paper are independent demand items

because their demand is driven by the needs of the café and bake
shop operations.