ABC analysis

The ABC analysis is an easy-to-use method of assessing a situation and setting priorities.

The ABC analysis can be used to graphically convey concentration ratios (Lorenz curve). The original application was to determine parameters for income distribution by the American Lorenz. In materials management, the ABC analysis determines the proportion of costs for the various warehouse parts for the total warehousing costs. In manufacturing, the materials with the highest cost share in the product are of interest. In marketing and sales, it is a case of finding the few items that, together, generate a high share of total sales. (Source: GPM)

Glossary Technical terms at a glance