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ABC analysis

17 Aug

A form of Pareto* analysis applied to a group of products for selective inventory management controls. The inventory value for each item is obtained by multiplying the annual demand by unit cost and the entire inventory is then ranked in descending order of cost. However, the classification parameter can be varied; for example, it is possible to use the velocity of turnover rather than annual demand value. (Source: ILT Supply-Chain Inventory Management SIG)

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