ABC analysis for better understanding of what products sell.
Interpretation: AZ is High sales high sporadic demand
Inventory segmentation, aka ABC inventory analysis, is the process of grouping inventory items based on certain criteria, such as sales volume, turnover rate, or profitability. By segmenting inventory, a business can identify which items are the most important to keep in stock and which ones may not be necessary to hold.
Once stock is segmented, a business can determine their optimal inventory hold, which is the amount of stock that should be kept on hand to meet customer demand while minimizing unnecessary costs. This can be done through various inventory management techniques such as Economic Order Quantity (EOQ) or ABC analysis.