ABC analysis is a classification of parts in descending sales volume order. Parts sorted in this way are classified as either A, B, or C parts, A-class parts being highest in value and C-class parts being lowest in value.
The purpose of the analysis is to identify the Inventory parts that are contributing the most to the total sales volume so that the ordering of A-class parts can be controlled to ensure both high service levels and low inventory levels. Less concern is required for lower-value parts. You determine which classes, representing what percentages of sales volume, the analysis will address. This data is specified in Inventory Basic Data/ABC Classes. This calculation is not carried out for configured parts.
For ABC calculation, these parameters are required:
ABC analysis calculates the ABC value of each part, for the specified site ID and cost set, by multiplying the quantity issued during the specified number of periods by the part's inventory unit value. The records are then sorted and classified in descending order of volume value. The calculation runs against optional cost set. Each part's ABC Class Code (in the inventory part register) is updated automatically.