When you use ABC classification for inventory control and supply planning, items are managed according to three different classes depending on their value and volume relative to the total stock. The value-volume distribution of the three classes is shown in the following table.
| Class | Percent of total stock volume | Percent of total stock value |
|---|---|---|
A | 10-20 | 50-70 |
B | 20 | 20 |
C | 60-70 | 10-30 |
The ABC classification states that effort and money can be saved by applying looser control to items of low value-volume than to items of high value-volume.
The following illustration shows which reordering policy in Microsoft Dynamics NAV is best suited for A, B, and C items respectively.
For more information about how to set specific item planning parameters under each reordering policy, see Setup Best Practices: Planning Parameters.