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In materials management, this analysis (or Selective Inventory Control) is an inventory categorization technique. It divides an inventory into three categories- 1 = items with very tight control and accurate records, 2 = items with less tightly controlled and good records, and 3= items with the simplest controls possible and minimal records.
Inventory analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost, while also providing a mechanism for identifying different categories of stock that will require different management and controls.
What is an ABC analysis?