What is ABC analysis

ABC analysis is defined as the "Classification of items in an inventory according to importance defined in terms of criteria such as sales volume and purchase volume".

ABC analysis categeries

‘A’ items – 20% of the items accounts for 70% of the annual consumption value of the items.

‘B’ items - 30% of the items accounts for 25% of the annual consumption value of the items.

‘C’ items - 50% of the items accounts for 5% of the annual consumption value of the items.

ABC analysis Diagram

 

 

 

 

 

Understand what is ABC analysis easily

For more details on other terms realted to ABC analysis in inventory management please browse through the other articles in Inventory Categery.