What is it?
ABC analysis is an approach for classifying inventory items based on the items’ consumption values. Consumption value is the total value of an item consumed over a specified time period, for example a year. The approach is based on the Pareto principle to help manage what matters and is applied in this context:
A items are goods where annual consumption value is the highest. Applying the Pareto principle (also referred to as the 80/20 rule where 80