ABC classification is based on the premise that a smaller number of items represent the most critical values of the inventory. ABC classification separates the most significant items from the least important and it’s used to determine the degree and level of control for the items. The ABC Classification is done based on Amount and Transactions of the Sales, Consumption and Outbound Transfer history.
The different ABC Classifications are setup in the ABC Classifications form. The system uses a double ABC Classification where items are classified both according to the usage in Amount and Transactions.
Code – The ABC Classification code. The system allows unlimited number of classifications as long as the Code is unique.
% of Total Amount – This field specifies the percentage of the total Amount that should be used to classify the items in each classification. E.g. if the Amount is calculated as Profit Amount then the items that stands for 80% of the profit will be classified as A.
% of Total Quantity – This field specifies the percentage of the total number of Transactions that should be used to classify the items in each classification.