PRESENTATION ON:-

“ABC” ANALYSIS
PRESENTED BY:- AKSHAY ANIL DHEKANE

ROLL NO:-209

BE MECH (B)
 INVENTORY
 

The term INVENTORY is defined as“the systematic control and regulation of

purchase, storage and usage of materials in such a way so as to maintain an
even flow of production and at the same time avoiding excessive investment
in inventories.”
DEFINATION OF ABC ANALYSIS

An analysis of a range of items that have different levels of significance and should
be handled or controlled differently. It is a form of Pareto analysis in which the items
(such as activities, customers, documents, inventory items, sales territories) are
grouped into three categories (A, B, and C) in order of their estimated importance. 'A'
items are very important, 'B' items are important, 'C' items are marginally important.

For example, the best customers who yield highest revenue are given the 'A'
rating, are usually serviced by the sales manager, and receive most attention. 'B' and
'C' customers warrant progressively less attention and are serviced accordingly.
 “A”ITEMS
 Small in number, but consume large amount of resources

Must have:-
 Tight control
 Rigid estimate of requirements
 Strict & closer watch
 Low safety stocks
 Managed by top management
 “B”ITEMS
Must have:
 Moderate control
 Purchase based on rigid requirements
 Reasonably strict watch & control
 Moderate safety stocks
 Managed by middle level management
 “C”ITEMS
 Larger in number, but consume lesser amount of resources
Must have:
 Ordinary control measures
 Purchase based on usage estimates
 High safety stocks

ABC analysis does not stress on items those are less

costly but may be vital
 Steps used to perform
an ABC Analysis
 1st step:- Identify the objective and the analysis criterion.
 2nd step:- Collect data about the analyzed population.
 3rd step:- Sort out the list by decreasing impact.
 4th step:- Calculate the accumulated impact and the percentage.
 EXAMPLE
  In shoes leather forms A grade materials , sole formsB grade materials and
shoe lace forms C grade 
 WHEN AND WHY TO
USE IT ?
 The ABC analysis can be also be useful in several steps of the Sourcing
Value Chain Demand Identification, to gather the annual spend of a site
Demand Aggregation, to gather the annual spend of several sites
Opportunity Assessment, to identify leveraging opportunities
 The ABC tool is used to identify the vital few from the trivial many,
according to a defined set of criteria
 Different decisions may be taken from the result ofthe ABC analysis.
 DISADVANTAGES
 It gets harder to do correctly the longer you do them.
 Needs to be completed in the moment for the most accuracy.
 Still might reflect the biases of the data collector.
 CONCLUSION
At last I conclude that ABC analysis is a vital method
for control the Inventory.
THANKYOU