what is ABC analysis please describe briefly.
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Answer Posted / mrithulla
ABC analysis is a business term used to define an inventory
categorization technique often used in materials
management. ABC analysis provides a mechanism for
identifying items which will have a significant impact on
overall inventory cost whilst also providing a mechanism
for identifying different categories of stock that will
require different management and controls. When carrying
out an ABC analysis, inventory items are valued (item cost
multiplied by quantity issued/consumed in period) with the
results then ranked. The results are then grouped typically
into three bands. These bands are called ABC codes.
ABC codes
 "A class" inventory will typically contain items
that account for 80% of total value, or 20% of total items.
 "B class" inventory will have around 15% of total
value, or 30% of total items.
 "C class" inventory will account for the remaining
5%, or 50% of total items.
ABC Analysis is similar to Pareto in that the "A class"
group will typically account for a large proportion of the
overall value but a small percentage of the overall volume
of inventory
ABC Analysis considers Antecedents, Behavior and
Consequences of individual actions. It can be used in two
circumstances:
 When doing general job analysis
 When investigating actual behaviors (for example
when someone is under-performing or has transgressed
company rules).
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