Category A: The handbags that are either highly in demand, generate the maximum revenue Revenue Revenue is the amount of money that a business can earn in its normal course of business by selling its goods and services.So, Susan classified the inventory into category A, B, and C, primarily based on their selling price and demand as mentioned below: Hence, she decided to implement the ABC analysis in her business model to streamline the inventory. However, later she realized the demand for the products is seasonal, and she had invested a lot. Consequently, she purchased 30 different types of handbags instead of just 10. Last year she decided to expand her product offering by including more varieties of sweaters in her inventory. Let us take the example of Susan, who is engaged in the retail sale of handbags. It is to be noted that there is no fixed threshold for any of these categories, and hence different value proportions can be used based on the company’s own objectives and criteria. Category C: Items in this category are marginally important and constitute a tiny portion of the overall inventory value.Typically, these items constitute mid-range in inventory value and have relatively lesser market demand. Category B: Items in this category are important, but not as important as those in category A.It helps identify and eliminate unnecessary costs incurred while making a product or conducting a business function. read more value analysis Value Analysis Value Analysis (VA) is a tool to enhance cost efficiency by evaluating the functionality of a product or a process concerning its cost. Hence, this category requires frequent Value Analysis (VA) is a tool to enhance cost efficiency by evaluating the functionality of a product or a process concerning its cost. Typically, these items either have a high value or a large market. Category A: Items in this category are essential and, sometimes, business-critical for a company.You are free to use this image on your website, templates, etc, Please provide us with an attribution link How to Provide Attribution? Article Link to be Hyperlinked ABC analysis classifies the inventory into three categories – Category A, Category B, and Category C.
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