Inventory Control Manager Question:
Do you know what is ABC Analysis?
Answer:
It is an inventory categorization technique often used in Materials Management. It is also known as Selective Inventory Control.
A ITEMS: very tight control and accurate records.
B ITEMS: less tightly controlled and good records.
C ITEMS: simplest controls possible and minimal records.
The ABC analysis suggests that inventories of an organization are not of equal value.
Example of ABC class are:
(1)
‘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.
(2)
"A" approximately 10% of items or 66.6% of value
"B" approximately 20% of items or 23.3% of value
"C" approximately 70% of items or 10.1% of value
A ITEMS: very tight control and accurate records.
B ITEMS: less tightly controlled and good records.
C ITEMS: simplest controls possible and minimal records.
The ABC analysis suggests that inventories of an organization are not of equal value.
Example of ABC class are:
(1)
‘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.
(2)
"A" approximately 10% of items or 66.6% of value
"B" approximately 20% of items or 23.3% of value
"C" approximately 70% of items or 10.1% of value