Professional Documents
Culture Documents
ABC Analysis
ABC Analysis
A.B.C. analysis is a selective technique of controlling different items of inventory. In actual practice, thousands of items are included in business as inventories. But all these items are not equally important. According to this technique, only those items of inventory are paid more attention which are significant for business. According to this technique, all items are classified into 3 categories A.B. and C. In A category those items are taken which are very precious and their quantity or number is small.
(ii) In B category those items are reserved which are less costly than the items of category A but their number is greater.
(iii) In category C all those items are included which are low priced but their number is highest.
The rate of use of items of category A is the highest and that of category C is the lowest. In a manufacturing organisation, the items of inventory can be classified as under:-