Classify inventory using ABC analysis with cumulative value curves, Pareto distribution, and category management recommendations.
ABC analysis ranks every SKU by annual usage value, which is units used per year times unit cost, then splits the ranked list into three classes: A items carrying roughly the top 80% of value, B items down to about 95%, and C items for the remainder. This tool sorts the lines, computes cumulative value, draws the Pareto curve, and prints per-class management guidance. The surprise most users hit: the class depends on value, not on unit price or unit volume, so a cheap part used constantly can outrank an expensive part used rarely.
A concrete input and expected output from the current implementation.
Input
Item, Annual usage, Unit cost Widget, 1000, 50.00 Gadget, 500, 40.00 Gizmo, 10000, 2.00 Trinket, 2000, 3.00 Doodad, 8000, 0.50
Expected output
Class Item Usage Unit cost Annual value Cum. share A Widget 1,000 $50.00 $50,000 50.0% A Gadget 500 $40.00 $20,000 70.0% B Gizmo 10,000 $2.00 $20,000 90.0% C Trinket 2,000 $3.00 $6,000 96.0% C Doodad 8,000 $0.50 $4,000 100.0% A: 2 items (40% of lines), 70% of value. B: 1 item (20% of lines), 20% of value. C: 2 items (40% of lines), 10% of value.
Total annual usage value is $100,000. Widget and Gadget together hold $70,000, so both stay under the 80% threshold and land in A. Gizmo pushes the cumulative share to 90%, which falls in the 80 to 95% band as B, and the remaining two lines fill the 95 to 100% band as C.
Each row gets an annual usage value: units used per year times unit cost. The tool sorts rows by that figure, then accumulates value down the list so every row shows its share of the grand total and a running cumulative share. Items inside the A band (commonly up to 80% of value) are class A, the next band (commonly 80 to 95%) is B, and the rest is C.
Class membership traces a Pareto-style curve: a few A items usually account for most of the inventory value, which is the 80/20 pattern the tool draws. Alongside the curve it reports item counts versus value share per class, and it prints management guidance for each: tight forecasts, frequent review, and cycle counts for A; routine controls for B; simple bulk ordering and light tracking for C.
Because ABC ranks by annual usage value, units times unit cost, not by unit price. A $2 part used 50,000 times a year ties up far more money than a $200 part used 50 times a year. A genuinely C item is a low-impact line: cheap to hold, a small claim on working capital, and a reasonable candidate for looser controls.
Either, but pick one and apply it to every row, because the ranking only means something when the money figure is consistent across items. Cost is the more common choice: ABC is about capital tied up in stock, and cost per unit is what purchasing records hold reliably. Switching price basis mid-list distorts the cumulative curve.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
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