Inventory is a major current asset for any organization as it is associated with many different costs. Inventory management is therefore essential, which is why the concept of inventory management has evolved. There are different inventory control techniques deployed by organizations, along with their inventory holding costs and potential profits, which fall under the concept of inventory management, such as ABC analysis, EOQ model, VED analysis , SDE analysis, etc. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an Original Essay Among these concepts, ABC analysis is the one that is most in action. ABC analysis focuses on identifying items that will have a significant impact on the overall cost of inventory. Organizations have various items in stock. But all these elements do not have the same importance since they have different values. This is why companies use ABC analysis to identify the most critical items based on their values. ABC analysis divides an inventory into three categories. A – High value items that require strict control. (70-80% of total value and 20% of total items)B - Moderate value items that require less control than A items but more control than C items. (15-20% of total value and 20-30% of total item)C – Low value items that require less control than items A and B. (5% of total value, almost negligible and 40-50% of total d 'items) These different categories of inventory will require different management and controls such as: Keep in mind: this is just a sample. Get a custom paper now from our expert writers. Get a personalized essay. Strict controls for A-items and maintaining very accurate records, optimal order processing and tracking mechanisms. Moderate checks for B items and maintaining good records with careful attention. Fewer controls for Type C items and keeping records simpler. The ABC concept is very important because it helps organizations recognize “where the value lies”. By focusing on inventory items relative to their values, a company can allocate appropriate resources to achieve optimal inventory levels, reduce inventory costs, ensure customer needs are met, and gain a competitive advantage over competitors in their market..