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What is A-Type Inventory in ABC Analysis of Control?
A-Type Inventory:
These are low volume and high value type of inventories. It means that their yearly consumption is extremely less but these are extremely costly items. In spite of needed less into volume, their yearly monetary value is rather high, as such are very costly items. The ABC analysis recommends cautious control of A-Type inventory. Extra periodic review is required.
Involvement of higher level of management is suggested in the review process. A minute reduction into the safety stock and EOQ will basis substantial saving for the organisation. This has been observed that a small percentage of items (as 10 to 20 percent) accounts for main percentage (as 70 to 80 percent) of the total yearly monetary consumption within inventories. Such are termed as A-Type inventories.
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