## ABC Analysis (Always Better Control)
ABC Analysis classifies inventory items into three tiers based on annual consumption value, so management attention is proportional to financial impact.
### Classification Logic
| Category | % of Total Items | % of Total Value | Control Intensity |
|---|---|---|---|
| A | ~10% | ~70% | Strict & regular |
| B | ~20% | ~20% | Routine/moderate |
| C | ~70% | ~10% | Minimal |
> Rule of thumb: few items account for most of the money (A), most items account for little money (C).
### Control Applied per Category
A Items — High investment; tight continuous monitoring to prevent both overstocking and shortages.
B Items — Standard routine control; no special scrutiny needed beyond normal processes.
C Items — Orders placed every 6 months or once a year based on annual consumption estimates; no constant monitoring.
### Why ABC Works
1. Focuses management energy on high-value items
2. Avoids over-spending control effort on trivial items
3. Minimises total ordering and carrying costs
4. Sustains a high inventory turnover rate