This article is part 1 of a 3 part series on ABC Inventory Analysis. Regardless of the strategy pursued by ABC, XYZ's best strategy is to produce a high level of output, and for that reason producing a high level of output is a dominant strategy for XYZ. Let us understand the dominant strategy with the help of the example given in Table-1. Suppose organizations ABC or XYZ adopt a dominant strategy. ABC classification has an important assumption which is 80-20 rule. For the analysis of the assortment of goods, «prospects» of clients, suppliers, debtors are used methods ABC and XYZ (rarely). optimization like ABC, XYZ, FSN, SDE, VED, HML etc. ABC and XYZ analysis in Excel with example of calculation. Create a robust business case with a … Dominant and Dominated Strategies: A dominant strategy is the one that is best for an organization (player) and is not influenced by the strategies of other organizations (players). When it comes to stock or inventory management, ABC analysis typically segregates inventory into three categories based on its revenue and control measures required: A is 20% of items with 80% of total revenue and hence asks for tight control; B is 30% items with 15% revenue; whereas ‘C’ is 50% of the things with least 5% revenue and hence treated as most liberal. Be realistic about the resource and time demands required for implementation. ABC/XYZ analysis is a method of grouping planning objects (characteristic value combinations, SKUs) based on their value (revenue or sales volume) and dynamics of consumption or sales. During the analysis, the planning objects are assigned one of the classes of ABC and XYZ simultaneously. Therefore one must carefully study the requirements before any of these categorizations are applied [4]. ABC analysis can be used for different purposes. Part 1 introduces the concept of ABC classification.. Part 2 provides a step-by-step walk through of how to conduct ABC Analysis.. Part 3 shares a few tips on properly conducting ABC analysis.. For Lean Manufacturing, Start With the ABC’s. It has also been applied to various other business and economic situations.. Check to ensure that systems and processes can be adapted to ABC/XYZ before embarking on the change. ABC classification is based on Pareto’s Law, which states that a small percentage of items accounts for a large percentage of value. The ABC XYZ classification thus provides a framework for developing and refining inventory management strategies by classifying products according to their sales volume (ABC) but also according to their uncertainties (XYZ). Base the business case on data that’s reliable. 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