Glossary
ABC Classification
This process ranks items in descending order of their annual dollar volume or other criteria and then splits them into three categories: A (high value), B (moderate value), and C (lower value)
Related Glossary Terms
Active Stock
Active stock means the inventory that a business uses, refills, and moves around regularly. This stock includes items with a constant turnover rate, are consistently in demand, and require frequent restocking. Active stock differs from passive or inactive stock, including items that move slowly or are rarely used.
ABC System
A cost management system that tracks financial and operational data on resources, activities, drivers, and measures. ABC models are created and maintained within this system.
ABC Model
In cost management, a representation that illustrates the cost of resources used over a period and how these are consumed by activities and subsequently traced to products, services, or customers.