Optimizing Inventory Management: An

Introduction to ABC Analysis

Prioritize, Allocate,
Succeed

SUBMITTED TO—DR. JAGDEEP SINGLA SIR

SUBMITTED BY --- SHIVAM SYAL

ROLLNO.----CUHP23MBA082
 Introduction

Did you know that 80% of a

company's sales typically
come from just 20% of its
inventory?
 ABC Analysis

ABC analysis, also known as

Pareto analysis or the
80/20 rule, is a strategic
inventory management
technique that categorizes
items into three groups
based on their importance
or value: A, B, and C.
 Principles and Criteria

A, B, and C Categories:

ABC
analysis divides inventory
items into three categories:
A, B, and C, based on their
significance to the business.
 Classification Criteria
• Annual Consumption Value:
Items are classified into A, B, and C categories based on annual
consumption values. This value is calculated by multiplying the unit
cost of each item by its annual usage quantity.
• Categorization Process:
(1) Identifying Annual Consumption Value
(2)Ranking Items
(3) Categorizing Items
1. 2.
 Benefits of ABC Analysis
• Optimized resource allocation
• Improved inventory control
• Cost savings
 Conclusion
• In conclusion, ABC analysis is a powerful tool for optimizing inventory
management.
• By categorizing items based on their importance, businesses can focus
their efforts where they matter most, leading to improved efficiency,
cost savings, and better decision-making.