52). The researcher handles or controls the items differently. It is a form of Pareto analysis where items such as customers, documents, activities, inventory items, sales territories grouped into three categories namely a, B, and C. In order of their estimated importance. Consequently, 'A' items are very important, 'B' items are important, and 'C' items are marginally important. The organization gives 'A' rating to their best customers since they yield the highest revenue. Sales managers serve them. 'B' rated customers (with more attention) would then follow and lastly 'C' customers whom warrants less attention and are served accordingly.
Advantages of ABC Analysis
ABC analysis provides the materials manager with opportunity to exercise selective control. Thus, the manager will only focus on a few items despite a possible confrontation with a numerous stores of items. When the material manager resorts to concentrate on 'A' Class items only, he is in a...
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