2. 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.”

3. (ABC = Always Better Control)
‡ This is based on cost criteria.
‡
It helps to exercise selective control when
confronted with large number of items it
rationalizes the number of orders, number of
items & reduce the inventory.
‡
About 10 % of materials consume 70 % of
resources
‡
About 20 % of materials consume 20 % of

4. 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

5. ‡
Intermediate
‡
Must have:
Moderate control
Purchase based on rigid requirements
Reasonably strict watch & control
Moderate safety stocks
Managed by middle level management

6. 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

8. 6- 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.
‡

9. - In shoes leather forms A grade materials , sole forms
B grade materials and shoe lace forms C grade
-ABC Analysis in Medical Stores inventory
materials, this is ABC analysis in Inventory Control
Background: The basic principle of inventory control is
management
ABC based on cost criteria . Methods: Based on ABC
matrix, economic analysis of drug expenditure of
priced vocabulary of medical stores (PVMS) section 01
for the year 2003 of a 190 bedded service hospital was
under taken. Result: Out of 493 drugs in PVMS section
01, only 325 drugs were being used in the reference
hospital. The total cost of drugs used was Rupees
55,23,503 . Of these 325 drugs, 47(14.4%) drugs were
Category A , consuming 70% of total expenditure, 73
(22.46 %) drugs Category B consuming 20% and rest

10. 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 of
the ABC analysis.

11. 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.

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