ABC analysis is an inventory categorization method that divides items into three categories - A, B, and C - based on their value and volume. Category A items are the most valuable, making up 20% of inventory items but 80% of total value. Category B items are next most valuable, comprising 30% of items and 15% of value. Category C items are least valuable, representing 50% of items but only 5% of total value. The method aims to focus management attention on the critical high-value Category A items rather than the many low-value Category C items.

1. By: Mahmood Al Amri
December 2013

2. What is ABC Analysis
In supply chain, ABC analysis is an inventory
categorization method which consists in dividing
items into three categories, A, B and C: A being the
most voluble items, C being the least valuable ones.
This method aims to draw managers’ attention on the
critical few (A-items) and not on the trivial many (C-
items).

3. ABC Analysis
 A category: 20% of items, value
80% of the inventory.
 B category: 30% of items, value
15% of inventory.
 C category: 50% of items, value
5% of inventory.

4. Advantage of ABC
 Helps to exercise selective control and focus a few
expensive items.
 Better Control of High-Priority Inventory.
 More Efficient Cycle Counts.
 Help to Design Stores Layout.
 Reducing cycle count costs and resulted in better planning.
 Implementing ABC inventory management in the
warehouse reduces labor cost and increases productivity.

5. Stock Tacking “Cycle Counting”
 The higher the usage, the more activity an item is
likely to have, hence the greater the likelihood that
transaction issues will result in inventory errors.
Therefore, to ensure accurate record balances, higher
priority items are cycle counted more frequently.
 “A” items are counted once every quarter.
 “B” items once every 6 months.
 “C” items once every 12 months.

6. ABC Analysis Daleel Inventory
Class % of inventory Number of line items Range Value of items
A 20% 518 180,000-750 $ 80%
B 30% 860 749-170 $ 15%
C 50% 3,624 169-0.001 $ 5%

7. Stock Tacking Plan 2014
Month Stock Tacking
March Category A
June Category A and B
September Category A
December Category A , B and C

8. ThankYou