IMPORTANCE AND NEED
There are so many types of products classification and categorizations available for inventory
optimization like ABC, XYZ, FSN, SDE, VED, HML etc. ABC analysis can be used for different purposes.
Therefore one must carefully study the requirements before any of these categorizations are applied [4]. There
are lots of assumptions for each categorization. ABC classification has an important assumption which is 80-20
rule. Another assumption is the planning horizon. There are no industry standards that define the Period of
Analysis and this are randomly decided based on convenience.