ABC Inventory Analysis Calculator

How it works

Rank items by annual usage value (unit cost × annual quantity); cumulative share = running total ÷ grand total; A until the cumulative share reaches the A cut-off (≈70–80%), B until the B cut-off (≈90–95%), C for the rest

ABC analysis applies the Pareto principle to inventory: a small share of items accounts for most of the money flowing through stock, so those deserve most of the planner’s attention. Ranking items by annual consumption value and accumulating the percentages typically shows the top 10–20% of SKUs (class A) holding 70–80% of value, the next 30% (B) about 15%, and the long tail (C) the last 5–10%. The classes then drive policy — forecast accuracy targets, review frequency, safety-stock service levels, cycle-count schedules and who approves purchases — so effort follows value. Many firms add a second dimension (XYZ for demand variability, or criticality) because a cheap C-item that stops a production line still needs a buffer.

Worked example

Twelve SKUs worth $117,300 a year: the top three (A100, B210, C305 — 25% of items) reach 76% of value and are class A; the next three take the cumulative to 92.5% (B); the remaining six are C with under 8% of value between them.

Frequently asked questions