ABC Analysis

  What is ABC Analysis? ABC analysis is the process of classifying the inventory into A, B and C classes based on their relative significance to business, either by their monitory value, utilization, carrying cost, and other factors. This allows leaders to allocate the company’s resources to maximize the efficiency. Class A: ·        Very important for an organization. ·        High value, so tighter control, accurate records and frequent valuation required. ·        Small (5-15) % of items account for Large (65-80) % of the value (consumption, costs, activity, etc.) Class C: ·        Is not critical for company’s operations. ·        Comparatively low value so management will not lose sleep on the accuracy of inventory. ·        Large (80+) % o...