What is ABC inventory analysis ?

Question

Accepted Answer

ABC inventory analysis is a method of categorizing inventory based on its value and importance.

ABC analysis divides inventory into three categories: A, B, and C.
Category A includes high-value items that make up a small percentage of inventory but a large percentage of total value.
Category B includes moderate-value items that make up a moderate percentage of inventory and value.
Category C includes low-value items that make up a large percentage of inventory but a small percentage of total value.
ABC analysis helps companies prioritize inventory management and control costs.
For example, a company might use ABC analysis to focus on reducing inventory costs for Category C items while ensuring adequate supply of Category A items.

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