ABC Grouping of Inventory Items:

These point illustrates clear delineations between sections. The result of this segmentation is illustrated in Table .

Table: ABC Grouping of Inventory Items

The aim of classifying items into groups is to establish the appropriate degree of control over each item. Figure illustrates the fundamental aspect of ABC method. Following observations may be made from Figure .

1. The inventory value and inventory portion captured by the A materials constitutes only 20% and 75% respectively.

2. Class B of materials represents 30% of the materials in inventory and 20% of the inventory value.

3. Likewise Class C of materials represents 50% of the inventory material and only 5% of inventory value.

On account of the above classification, following inference may be made that with enhancement in inventory value of a material, extent of analysis also rises. Normally, Class A materials would be extensively analyzed as compared to the Class C of the materials. The implementation of this classification needed an intelligent decision and judgment that is depends on under mentioned points.