ERP Term
"ABC Analysis"

ABC analysis classifies part IDs by the value and the usage of the item. Parts that cost the most and/or are used most frequently are "A" items. Parts that cost the least and/or are used least are "C" items. All other parts are "B" items.

ABC analysis is a technique for classifying items based on their value and usage. A items are the most valuable and/or most frequently used items, while C items are the least valuable and/or least used items. B items fall in between these two extremes. 

This classification system can be useful for a variety of purposes, such as determining which items should be stocked in inventory or which items should be given priority in terms of production or procurement. 

There are a few different ways to calculate ABC values, but the most common method is to assign a percentage value to each category. For example, A items may be assigned a value of 80%, B items may be assigned a value of 15%, and C items may be assigned a value of 5%. 

This system is not without its flaws, however, as it can be difficult to accurately assign values to items. Additionally, ABC analysis does not take into account all factors that may be relevant to decision-making, such as lead time or availability. Nonetheless, it is a helpful tool that can provide valuable insights into inventory management and other business processes.

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