ABC analysis

In materials management, the ABC analysis is an inventory categorization technique. ABC analysis divides an inventory into three categories—'A items' with very tight control and accurate records, 'B items' with less tightly controlled and good records, and 'C items' with the simplest controls possible and minimal records. In materials management, the ABC analysis is an inventory categorization technique. ABC analysis divides an inventory into three categories—'A items' with very tight control and accurate records, 'B items' with less tightly controlled and good records, and 'C items' with the simplest controls possible and minimal records. ABC analysis is a business term used to define an inventory category technique after news in materials management it is also known as selective inventory very control policies based on ABC analysis The ABC analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost, while also providing a mechanism for identifying different categories of stock that will require different management and controls. The ABC analysis suggests that inventories of an organization are not of equal value.Thus, the inventory is grouped into three categories (A, B, and C) in order of their estimated importance.