Asked by Lourie Peters on May 11, 2024
Verified
The ABC analysis is based on Pareto's law.
ABC Analysis
A method of categorizing inventory into three classes, with 'A' items being of high value, 'B' items of moderate value, and 'C' items of lower value, to prioritize inventory management efforts.
Pareto's Law
Also known as the 80/20 rule, it states that for many events, roughly 80% of the effects come from 20% of the causes, applicable in various contexts including economics and business.
- Comprehend the core concepts of inventory classification tactics like ABC analysis, and their role in prioritizing stock keeping units by their level of importance.
Verified Answer
LS
Lydia SchulzMay 11, 2024
Final Answer :
True
Explanation :
The ABC analysis is based on Pareto's law, also known as the 80/20 rule, which states that roughly 80% of the effects come from 20% of the causes. This principle is widely used in management and economics, and is the foundation for the ABC analysis, which categorizes items based on their importance and value.
Learning Objectives
- Comprehend the core concepts of inventory classification tactics like ABC analysis, and their role in prioritizing stock keeping units by their level of importance.