ABC ANALYSIS
ABC analysis is an inventory control technique based on the annual consumption value (cost) of items. It follows the Pareto principle (80/20 rule), where a small proportion of items accounts for the majority of the expenditure. Total budget = ₹50,000 A Items: High-value items that consume the largest portion of the budget (~70%) despite accounting for a small proportion of inventory (~10%). Here, 35,000 Rs out of 50,000 Rs (70%) is allocated to 'A' drugs. B Items: Medium-value items consuming moderate budget (~20%). Here, 10,000 Rs out of 50,000 Rs (20%) goes to 'B' drugs. C Items: Low-value items consuming the remaining small budget (~10%). Here, the remaining 5,000 Rs (10%) goes to 'C' drugs.