How is ABC inventory analysis calculated?

Asked 2 years ago

Hi guys, I'm working on optimizing my inventory and trying out different strategies and techniques to maintain my stock levels and keep my expenses as low as possible. How would I do an ABC analysis?

Donovan Wong

Tuesday, April 19, 2022

An ABC Calculation is usually carried out within five steps, which are as follows:

-First, multiply the annual number of products with each item's cost and find the utility of that product.

-Make a category of every product in the descending order based on its usage value.

-Add the usage value of the products, including the total number of items.

-Find out the cumulative percentages of items sold and annual consumption value.

-Now, it's time to divide your data into three categories, finally, in an approximate ratio of 80:15:5.

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