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ABC Inventory Classification

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Provide an example of ABC classification in a business you are familiar with. What would be the A inventory items versus B and C? What ordering policies would you use for each of these?

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Solution Summary

The solution provides an examination of the ABC classification for inventory as defined and as applied to ordering.

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The ABC classification is system used to classify parts sold by a company based on the annual consumption value or sales. The ABC classification is based on Pareto's principal that 20% of the goods sold account for 80% of the sales. The parts classified as an A part accounts for 70% - 80% of the sales, but account for 10% - 15% of the total parts sold by the company. The parts classified as a B part ...

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