ABC Inventory Control:

Maintenance of inventory through counting, placing orders, receiving stock, and so on takes personnel time and costs money. Since, these resources are available in limited capacity, so it is necessary to use the available resources for controlling inventory in best possible way. Any inventory system must specify when an order is to be placed for an item and how many units are required to be ordered. Most inventory control situations involve so many items that it is not practical to model and give treatment to each item. To get around this problem, the ABC classification scheme divides inventory items into three groupings : high value (A), moderate value (B), and low value (C). Usage is a measure of importance; an item low in cost but high in volume can be more important than a high-cost item with low volume.