What is abc analysis no bookish answer
This query is : Resolved
24 January 2015
Plas explain abc analysis in costing and pls no bookish answer
25 January 2015
ABC Analysis comes under the purview of inventory management. It refers to the categorization of inventory based on its significance in the production process.
This analysis works under the assumption that all inventories are not of equal value to the organization so they need to be treated differently. Inventories are categorized as under:
‘A’ items – 20% of the items accounts for 70% of the annual consumption value of the items.
‘B’ items - 30% of the items accounts for 25% of the annual consumption value of the items.
‘C’ items - 50% of the items accounts for 5% of the annual consumption value of the items.
So A needs greater attention and close monitoring, B needs lesser attention and C needs minimal attention.
Also check out the video from link given below:
https://www.youtube.com/watch?v=2h7nOY2ICHA
This analysis works under the assumption that all inventories are not of equal value to the organization so they need to be treated differently. Inventories are categorized as under:
‘A’ items – 20% of the items accounts for 70% of the annual consumption value of the items.
‘B’ items - 30% of the items accounts for 25% of the annual consumption value of the items.
‘C’ items - 50% of the items accounts for 5% of the annual consumption value of the items.
So A needs greater attention and close monitoring, B needs lesser attention and C needs minimal attention.
Also check out the video from link given below:
https://www.youtube.com/watch?v=2h7nOY2ICHA
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