Inventory ABC Analysis
ABC Analysis is an inventory categorization technique that divides items into three categories (A, B, and C) based on their value and importance to the business.
Typically, the classification follows the Pareto principle:
- A-items: 20% of items, 80% of value
- B-items: 30% of items, 15% of value
- C-items: 50% of items, 5% of value
ABC Analysis Calculator
ABC Analysis Results
A Items
B Items
C Items
How to Use This ABC Analysis Calculator
ABC Analysis helps prioritize inventory management efforts by classifying items based on their consumption value. Follow these steps:
- Enter your item data: Either manually input your items or upload a CSV file with columns for Item ID, Annual Demand, and Unit Cost
- Adjust thresholds (optional): Modify the A and B category thresholds if needed (default is A: 80%, B: 95%)
- Calculate: Click the "Perform ABC Analysis" button to see your results
- Review the classification: The calculator will show which items fall into A, B, and C categories
The results will help you determine where to focus your inventory management efforts for maximum efficiency.
About ABC Analysis
ABC Analysis, also known as Pareto Analysis or the 80/20 rule, is a method of categorizing inventory items based on their importance and value to the business.
Category Definitions:
- A Items: High-value items that represent a large portion of the total inventory value but a small percentage of total items. These require tight control, accurate records, and regular review.
- B Items: Moderate-value items that fall between A and C categories. These require normal controls and good records.
- C Items: Low-value items that represent a small portion of the total inventory value but a large percentage of total items. These require simple controls and periodic review.
By classifying inventory this way, businesses can optimize their inventory management efforts, reduce costs, and improve efficiency.
Frequently Asked Questions
ABC Analysis is an inventory categorization technique that divides items into three categories (A, B, and C) based on their value and importance. A-items are the most valuable, C-items are the least valuable.
Categories are determined by calculating the annual consumption value of each item (demand × unit cost), sorting items in descending order of value, and then classifying them based on cumulative percentage of total value.
The most common thresholds are:
- A-items: Top 80% of total value
- B-items: Next 15% of total value
- C-items: Remaining 5% of total value
These can be adjusted based on your specific inventory characteristics.
Each category requires different management approaches:
- A-items: Tight control, frequent review, accurate records, and optimized order quantities
- B-items: Normal control, regular review, and good records
- C-items: Simple control, periodic review, and minimal paperwork