# ABC Analysis (Selective Inventory Control)
ABC analysis exercises discriminating (selective) control over inventory items based on the investment (value) involved, rather than treating every item alike. Items are classified into three categories by their relative importance — value and frequency of replenishment.
## The Three Categories
| Category | % of Total Items | % of Inventory Value | Nature & Control |
|---|---|---|---|
| A | ~10% | ~70% | Few items but heavy investment (high price and/or heavy requirement). Need tight control. |
| B | ~20% | ~20% | Moderately important. Control is looser than A. |
| C | ~70% | ~10% | Many items, small investment. Need only loose control. |
## Key Principle
A small number of high-value items ('A') deserve the closest monitoring, while the large number of low-value items ('C') warrant only routine attention. This focuses management effort where the money is.