Which of the Following Statements About ABC Analysis Is FALSE

Multiple Choice

Which of the following statements about ABC analysis is FALSE?

A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.
B) In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have.
C) In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items.
D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
E) Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis.