In an ABC report, which letter represents items that constitute 20 percent of total inventory and 80 percent of total revenue?

In inventory management, the ABC analysis is a method used to categorize inventory items based on their importance and value to the organization, typically in terms of revenue generation. The classification divides inventory into three categories:

• A items: These are high-value items that typically constitute about 20% of the total items but account for a significant portion of total revenue (around 80%). They require frequent monitoring and management due to their importance to the financial health of the company.

• B items: These represent moderate value items, falling in between A and C categories in terms of value and revenue contribution.

• C items: These are low-value items that make up a larger percentage of inventory (about 50%) but contribute much less to total revenue, often only around 5-10%.

In the context of the question, items that make up approximately 20% of total inventory and contribute to around 80% of total revenue are classified as A items. This classification highlights their critical role in the supply chain and financial performance of the organization. Understanding this categorization helps businesses prioritize their inventory management efforts to ensure that they focus on the most impactful items.