# Abc Analysis Essay

1502 Words Oct 21st, 2014 7 Pages
ABC analysis (Inventory)
In supply chain, ABC analysis is an inventory categorization method which consists in dividing items into three categories, A, B and C: A being the most valuable items, C being the least valuable ones. This method aims to draw managers’ attention on the critical few (Aitems) and not on the trivial many (C-items).

Prioritization of the management attention
Inventory optimization is critical in order to keep costs under control within the supply chain. Yet, in order to get the most from management efforts, it is efficient to focus on items that cost most to the business. The Pareto principle states that 80% of the overall consumption value is based on only 20% of total items. In other words, demand is not evenly
3. List out all the items and arrange them in the descending value. (Annual Value) 4. Accumulate value and add up number of items and calculate percentage on total inventory in value and in number. 5. Draw a curve of percentage items and percentage value. 6. Mark off from the curve the rational limits of A, B and C categories.

eCommerce example

The graph above illustrates the yearly sales distribution of a US eCommerce in 2011 for all products that have been sold at least one. Products are ranked starting with the highest sales volumes. Out of 17000 references:
  

Top 2500 products (Top 15%) represent 70% of the sales. Next 4000 products (Next 25%) represent 20% of the sales. Bottom 10500 products (Bottom 60%) represents 10% of the sales.

2

Inventory management policies
Policies based on ABC analysis leverage the sales imbalance outlined by the Pareto principle. This implies that each item should receive a weighed treatment corresponding to its class:

A-items should have tight inventory control, more secured storage areas and better sales forecasts. Reorders should should be frequent, with weekly or even daily reorder. Avoiding stock-outs on A-items is a priority. Reordering C-items is made less frequently. A typically inventory policy for C-items consist of having only 1 unit on hand, and of reordering only when an actual purchase is made. This approach leads to stock-out situation

## Related Documents

• ###### Abc, Inc. Case Study Analysis Essay

COMM 215 July 20, 2005 ABC, Inc. Case Study Analysis Case Study Background In April, Carl Robins, a new recruiter for ABC, Inc, with only six months experience, successfully hired 15 new employees. The new trainees were hired to work for Monica Carrolls, the Operations Supervisor. Carl Robins scheduled a new hire orientation to take place June 15 with the intent of having all the new hires working by July. On May 15, Monica Carrolls contacted Carl about coordinating many issues for the new…

Words: 774 - Pages: 4
• ###### Analysis of ABC Murders Essay example

expose a highly cautious serial killer who could be anyone living anywhere in the country. In Agatha Christie’s ABC Murders, Hercule Poirot has this exact task placed upon him. A murderer, who only kills in alphabetical order, is on the loose, and Poirot, along with his partner and the police squad, is charged with the case. After a few consecutive murders, clues began to be found as to who “ABC” actually is. A surprising plot twist occurs at the end which has the reader questioning how Monsieur Poirot…

Words: 1019 - Pages: 5
• ###### Analysis Of Abc 's Building An Adult Entertainment Retail Store

purchased by ABC to build an adult entertainment retail store. According to the plan, the land is located on the corner of the neighborhood where Owen, Luke’s brother, lives. Luke has various concerns regarding this aspect in which he clearly understands the effect that the project has on the value of land, where the project will be commissioned. Luke knows that as soon as the plans for the store are made public, property values for the surrounding neighborhood will decrease significantly. ABC plans to…

Words: 995 - Pages: 4
• ###### Essay Strategy Analysis : Abc Foods

strategic forecasts, for medium to long term strategy analysis, and tactical forecasts, for short term forecasts in day to day operations (Jacobs & Chase, 2014). ABC Foods have analyzed the issues it can face after their expansion to delivering their products. There are two major failures in operations they can face during this phase. To tackle these failures, ABC Foods have come up with the following potential solutions: 1. Plan a trial phase: ABC Foods will initiate a trial phase for a week. During…

Words: 735 - Pages: 3
• ###### Essay Abc Project

the southwestern USA. It is a casual service restaurant and has about 50 seats. The study will calculate Activity-Based Costs for major items from the restaurant menu as selected by management. Students should incorporate the following steps: ABC Stage One 1. Decompose the general ledger (use the provided income statements for April 2014 – Table 1) into major cost pools following the model below (Figure 1). Please note that the payroll for the FOH was \$12,521.06 and the payroll for…

Words: 1076 - Pages: 5
• ###### Essay As the Controller of Abc Company

Running Head: FINAL As the Controller of ABC Company Johnnisha Burton ACC 206 Principles of Accounting II Anton Narinskiy January 21, 2013 Purpose of the Paper This report’s purpose is to be of assistance to the CEO of ABC Company to determine if the new project should be put into action and the way that it can be within the means financially through presenting information regarding the projected costs…

Words: 2071 - Pages: 9
• ###### ABC Analysis for Inventory Management Essay example

ABC analysis (Inventory) In supply chain, ABC analysis is an inventory categorization method which consists in dividing items into three categories, A, B and C: A being the most valuable items, C being the least valuable ones. This method aims to draw managers’ attention on the critical few (Aitems) and not on the trivial many (C-items). Prioritization of the management attention Inventory optimization is critical in order to keep costs under control within the supply chain. Yet, in order…

Words: 1450 - Pages: 6
• ###### Essay Report On Abc Security Services

There were different problems outlined in the organization overview and those included the human resources department, payroll department, employee hiring, employee training, customer satisfaction, and licensing. ABC security services is experiencing high employee turnover, and many operations managers as well as site supervisors are not taking the steps to investigate the reasons why this is happening. For the last couple of years many issues have surfaced including the increased workload on security…

Words: 1434 - Pages: 6
• ###### Essay The Abc Murders

The ABC Murders - Summary and analysis Summary (Spoiler Alert): Hastings, Hercule Poirot's partner and assistant, returns to Britain, just as Poirot receives a sinister letter from an unknown person under the alias ABC. The letter says, that he should look out for Andover, on the 21st of the month. Just as stated in the letter, something happens on the 21st. A woman in Andover, named Alice Asher, turns up dead. On the crime scene an ABC railway guide is found, and Andover is marked. The police…

Words: 1022 - Pages: 5
• ###### Abc Inc. Case Study Analysis Essays

Case Study Analysis This is a case study analysis of the hiring process conducted by new recruiter Carl Robins. The ABC Inc employee encountered several problems while attempting to complete the hiring process of 15 new employees. Problems include poor time management, lack of attention to detail, and poor communication. Improvements to be made are weekly meetings between key office personnel and implementing a training program for all employees regardless of position. Background New campus…

Words: 1439 - Pages: 6