ABC Analysis is a technique used in inventory management and sales forecasting to categorize items, customers, or sales into three categories based on their importance or priority. The three categories are:
A- Items: High-value items that contribute a significant percentage of revenue or profit. These items are typically a smaller percentage of the total but have a high impact on the bottom line.
B- Items: Medium-value items that are important but not as critical as A items. These items typically have a moderate impact on revenue and profit.
C- Items: Low-value items that have the least impact on revenue or profit. These items are typically a larger percentage of the total but have a lower impact on the bottom line.
By categorizing items or customers in this way, businesses can prioritize their resources and focus on the items or customers that have the greatest impact on their bottom line. This allows for more efficient inventory management, sales forecasting, and marketing strategies.
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