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Supply Chain Management Process Standards, Second Edition by CSCMP

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Glossary of Terms

A

ABC: See: Activity-Based Costing.

ABC Classification: A method of classifying inventory items relative to their impact on total control. ABC typically uses movement and cost data to calculate the value of stock usage over the prior period, and uses the result as an element in ranking items under an 80/20 Pareto rule for cycle counting purposes. The group is divided into classes called A, B, and C (and sometimes D) with the A group representing the highest value with 10-20% by number of items. The B, C, and D (if used) groups are each lower values but typically higher populations. Items with higher usage value (20%) are counted more frequently. Specific bars to be used in setting ABC levels will vary by organization as they ...

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