What is the purpose of A-B-C inventory classification?

The purpose of A-B-C inventory classification is to prioritize inventory management efforts based on the importance of items. This classification system divides inventory into three categories: A, B, and C, where "A" items are the most valuable and require the most attention and control, while "C" items are the least valuable and can be managed with less stringent controls.

By focusing on the most critical items—in terms of value, turnover, or usage—managers can ensure optimal inventory levels, reduce carrying costs, and improve overall efficiency in inventory management. This strategic approach allows businesses to allocate resources effectively, ensuring that high-value items receive the appropriate level of oversight and management, while lower-value items can be managed with less intensity.