MRP glossary TOP > Inventory Control > ABC Analysis
ABC Analysis
ABC Analysis
According to the relationship between the total money spent and the total quantity of unsold inventory, the system ranks inventory items and groups them into three (A, B, C) codes. By making a difference in inventory goods by priority, it will be able to control its inventory in terms of importance. For example, as shown in the figure, it categorizes all items into A,B, and C, where more emphasis is placed on higher value items of A, while less time and attention are given for C items (a negligent control), which is very common as an inventory control method, and is used for cycle counting, etc.
Reference:JIT Business Research Mr. Hirano Hiroyuki