This analysis works under the assumption that all inventories are not of equal value to the organization so they need to be treated differently. A typical ABC analysis classifies the inventory based on the following table.
Type of Inventory
Type of Importance
Type of control
Accurate records, very tight control
Little less important
Decent records, a little less tight control
Only essential records, light controls
Typically “A items” consist of minimum amount of items but these items account for a major proportion of value for the organization and so on with the other items.