ABC Analysis

ABC Analysis is a method used in inventory management to categorize items based on their importance. It classifies inventory into three groups: A, B, and C. 'A' items are the most valuable, making up a small percentage of total inventory but a large portion of the overall value; 'B' items are of moderate value, and 'C' items are the least valuable, typically accounting for most of the inventory but a smaller share of the value. This helps businesses focus their efforts and resources on managing their most critical items effectively, improving efficiency and reducing costs.