ABC analysis

It is the Methods of Inventory/Material control
ABC ANALYSI S STOCK LEVELS Perpetual Inventory System

EOQ(Econo mic Order Quantity)

” .What is 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.

accounts for approximately 15% of the total material consumption.The “A” items consists of approximately 15% of the total items . accounting only 5% of the monetary value of total material usage . accounts for 80% of the total material usage.What is ABC Analysis? • ABC analysis divides the total inventory into 3 classes A. This items merit a tightly controlled inventory system with constant attention to the purchase & stores management. A larger effort per item on only a few items will cost only moderately. which constitute approximately 35% of the total items. but the effort can result in larger savings. It consists remaining 50% items. . • class “B” items constitute an intermediate position. These items merit a formalized inventory system & periodic attention but the purchase & the stores management.B & C using the rupee volume. as follows: • class “A” items constitute the most important class of inventories so far as the proportion in the total value of inventory . • class “C” items are quite negligible. Quite relaxed inventory procedures are used.

Class “A” ABC ANALYSIS OF INVENTORY Class “B” Class “C” .

sole forms B grade materials and shoe lace forms C grade materials this is ABC analysis in inventory management .Ex .In shoes leather forms A grade materials .

Section 01 for the year 2003 of a 190 bedded service hospital was under taken.503. 73 (22.46 %) drugs Category B consuming 20% and rest 205 drugs (63.7%) Category C drugs cost only 10% of expenditure.23. economic analysis of drug expenditure of a Medical Store in Hospital. 47(14. only 325 drugs were being used in the reference hospital. consuming 70% of total expenditure. Result: Out of 493 drugs in Medical Store section 01.Background: The basic principle of inventory control is ABC based on cost criteria . The total cost of drugs used was Rupees 55. Methods: Based on ABC matrix. ABC Analysis in Medical Stores Inventory Control . Of these 325 drugs.4%) drugs were Category A .

ITEM A B C ITEMS(%) 10 20 70 MONEY VALUE(%) 70 20 10 .

Must be handled by senior officers. 5. Can be fully delegated. 4. No safety stocks or very 2. 5. 3.Very strict control.Minimum Value Analysis. 5. .Periodic follow-up. 3.Moderate control 1. 2. Loose control 2.Moderate value analysis. 3.High safety stocks.Rigorous value analysis.Follow –up & expediting in exceptional cases.Maximium follow-up & expediting.Low safety stocks low safety stocks. 4.“A “ Class items (High Consumption Value) 1. Can be handled by middle management. 4. “B” Class items “C” Class items (Low (Moderate Consumption Consumption Value) Value) 1.

6. 7.6. 8. 7. 8. 8. . 6. 7.

CONCLUSION At last I conclude that ABC analysis is a vital method for control the Inventory. .

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