ABC inventory analysis
In one sentenceDividing inventory items into three categories by value: A, few items with high value; B, medium; and C, many items with low value.
Simply put
Not all items are equally important. A small number of items usually carries most of the inventory value; these are category A, and they deserve close monitoring and frequent counts.
Category C items are many but their value is small, so simpler control is enough. This way you spend your time where the money is.
Worked example
An auto parts store has inventory worth 2,000,000 SAR in 2,000 items, and ranked the items by value.
Category A: 100 items1,400,000 SAR (70% of the value)
Category B: 300 items400,000 SAR (20%)
Category C: 1,600 items200,000 SAR (10%)
5% of the items carry 70% of the value100 items deserve a monthly count
Don't confuse it with
Slow-moving inventoryABC analysis ranks by value, while slow-moving inventory is identified by little movement, and a slow-moving item may be in category A.