Asked Feb 27, 2019

What is ABC inventory system?


Expert Answer

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Step 1

Define ABC inventory system:

ABC inventory system is the system that comes under material management and it is the kind of inventory categorization technique. It is used by the firms that has different kind of inventories, as it is not recommended to use same inventory system for various types of inventory.

Here, in ABC inventory system, the inventories will be categorized as "A items", "B items", and "C items". The items will be sorted based on the consumption values.

Step 2

A, B, and C items:

High value inventory items will be categorized under "A items", which will have the highest consumption value.

Moderate value inventory items will be categorized under "B items", which will have low consumption value than "A items" and high consumption valu...

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