ABC breakpoints and organizations
ABC analysis helps you quickly identify which inventory items represent the greatest monetary investment for your company in terms of dollar value and rate of turnover. This analysis ensures that crucial inventory does not fall below minimum levels, and helps keep current balance figures for an item reconciled with the actual count.
The ABC type value for an item is determined by running the Inventory ABC Analysis report. You can run this report from the Inventory application or module. This report multiplies the current year-to-date issued quantity by the last cost of the item. The report sorts the items in descending order of the calculated dollar value.
The types values for A, B, or C are set based on the percentages that you specify in the Organizations application. You can set an ABC type to indicate no category, and that type is excluded from the ABC analysis.
- Type A break point 30% (enter .30)
- Type B break point 30% (enter .30)
- Type C break point 40% (enter .40)
The Inventory ABC Analysis report also changes the cycle count for the item, based on the ABC type and the cycle count. If the ABC type is set to N, the cycle count is not changed.
You set the cycle count to the number of days for each ABC type. For example, type A cycle counts can be 30 days, type B cycle counts 60 days, and type C cycle counts 90 days.
You can run the Inventory Cycle Count report to show each item that is due for a cycle count in the next month, together with its ABC type.