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