ABC Classification groups inventory items into which categories based on value?

ABC Classification groups inventory items into which categories based on value?

• A. A high value, B medium, C low
• B. High risk, Medium risk, Low risk
• C. Large, Medium, Small
• D. Fast-moving, Slow-moving, Obsolete

Answer: (A)

ABC classification focuses on organizing inventory by value to help prioritize how closely you manage and control items. In this approach, items are grouped into three value-based tiers: high-value, medium-value, and low-value. The idea is that a small number of high-value items typically account for a large portion of the total annual value, so they receive the most careful monitoring, tighter controls, and more accurate records. Medium-value items get a moderate level of attention, and low-value items, though numerous, require less intensive oversight because each one contributes relatively little to total value. So, when a question asks which categories are used based on value, the correct description is high-value, medium-value, and low-value items. The other options describe risk levels, physical size, or movement speed, which are not how ABC classification by value is defined.

ABC classification focuses on organizing inventory by value to help prioritize how closely you manage and control items. In this approach, items are grouped into three value-based tiers: high-value, medium-value, and low-value. The idea is that a small number of high-value items typically account for a large portion of the total annual value, so they receive the most careful monitoring, tighter controls, and more accurate records. Medium-value items get a moderate level of attention, and low-value items, though numerous, require less intensive oversight because each one contributes relatively little to total value.

So, when a question asks which categories are used based on value, the correct description is high-value, medium-value, and low-value items. The other options describe risk levels, physical size, or movement speed, which are not how ABC classification by value is defined.