What inventory management technique classifies inventory items into three distinct categories based on their annual consumption value?

Explanation

• ABC Analysis categorizes inventory using the Pareto Principle: Category A (high value, low quantity), Category B (moderate value/quantity), and Category C (low value, high quantity).
• Category A items require tight control and frequent monitoring; Category C items demand minimal supervisory oversight.
• ABC stands for ‘Always Better Control’ in materials management terminology.