Inventory Management
Example of ABC Pareto Analysis for Inventory Management
Example calculation of ABC analysis for inventory management based on usage value.
What it does
Example calculation of ABC analysis for inventory management based on usage value.
See it in action
A worked example
Six SKUs with a year's usage and unit cost. Usage value is usage multiplied by unit cost. The SKUs are sorted by value and each one's running share of the total sets its class: A below 80%, B below 95%, C for the rest.
| Rank | SKU | Usage | Unit cost | Usage value | Running share | Class |
|---|---|---|---|---|---|---|
| 1 | SKU-001 | 10,000 | £5.00 | £50,000 | 50% | A |
| 2 | SKU-002 | 5,000 | £5.00 | £25,000 | 75% | A |
| 3 | SKU-003 | 4,000 | £3.00 | £12,000 | 87% | B |
| 4 | SKU-004 | 1,400 | £5.00 | £7,000 | 94% | B |
| 5 | SKU-005 | 2,000 | £2.00 | £4,000 | 98% | C |
| 6 | SKU-006 | 4,000 | £0.50 | £2,000 | 100% | C |
Two SKUs out of six carry 75% of the value, so they get the closest control.
What data it needs
We will list the data this Tool-module needs when it is ready to launch.