ABC and XYZ inventory analysis

Q: How do I build an ABC inventory analysis?

Multiply each item’s annual usage by unit cost, sort from highest to lowest value and compute the cumulative percentage. Items up to 80% of value are A, up to 95% are B, the rest are C.

Q: What is XYZ classification for?

To separate steady items from erratic ones. Combined with ABC, it shows where to use automatic replenishment (AX), where to calculate safety stock (AY, BY) and where to buy only on demand (AZ, CZ).

Q: Are the 80/95 limits mandatory?

No. They are common references. Some companies use 70/90 or classify by item count. What matters is reviewing the classification regularly.

Find the few items that hold most inventory value and which have erratic demand, so control effort goes where it matters and the rest is simplified.

Pre-sizing and estimating tool: results do not replace design, calculations or reports signed by a licensed professional, nor verification against the applicable codes and standards.

Check

Items

One item per line: name; unit cost; usage (annual or each month)

Bearing 6205; 1.33; 34; 33; 26; 27; 32; 25; 30; 23; 31; 25; 31; 37
V-belt A-42; 4.01; 85; 98; 135; 73; 113; 0; 70; 79; 64; 106; 73; 106
ISO VG 68 oil; 125.50; 27; 14; 14; 40; 12; 20; 47; 46; 31; 6; 0; 33
Air filter; 2.91; 0; 0; 0; 0; 0; 0; 0; 0; 0; 8; 0; 0
Oil seal 40×62; 4.90; 22; 23; 20; 18; 18; 23; 15; 22; 22; 26; 16; 22
Bolt M12; 34.79; 21; 101; 128; 72; 73; 83; 79; 111; 116; 105; 59; 96
Contactor 32 A; 104.35; 7; 0; 4; 2; 9; 10; 1; 3; 12; 5; 7; 5
Inductive sensor; 1.64; 0; 0; 42; 0; 15; 0; 41; 0; 29; 32; 0; 0
Hose 1/2"; 16.44; 25; 33; 27; 27; 26; 30; 29; 27; 20; 26; 21; 30
EP2 grease; 0.67; 9; 32; 46; 52; 26; 42; 31; 37; 32; 44; 34; 47
Cutting disc; 21.45; 17; 25; 31; 0; 35; 0; 28; 59; 39; 10; 3; 38
Nitrile gloves; 78.32; 191; 235; 0; 36; 0; 0; 0; 48; 0; 0; 85; 0
Mechanical seal; 3.73; 12; 19; 16; 14; 17; 16; 17; 16; 15; 13; 18; 15
VFD 10 hp; 36.04; 70; 50; 61; 76; 92; 52; 44; 26; 41; 22; 25; 84
Coupling; 2.19; 19; 12; 47; 17; 40; 39; 10; 50; 11; 20; 3; 15
LED lamp; 0.76; 0; 9; 0; 6; 4; 19; 0; 17; 25; 0; 0; 0
Solenoid valve; 10.32; 159; 196; 163; 141; 160; 159; 189; 158; 198; 155; 198; 120
Fuse class J; 33.21; 13; 24; 12; 16; 20; 11; 21; 25; 25; 27; 27; 15
E7018 electrode; 90.60; 191; 164; 122; 86; 109; 0; 180; 133; 186; 45; 0; 43
Epoxy paint; 8.17; 19; 0; 4; 0; 0; 0; 0; 0; 0; 0; 0; 0
Wire 12 AWG; 1.56; 34; 34; 31; 37; 35; 37; 32; 32; 40; 33; 40; 28
Gasket sheet; 3.69; 46; 38; 18; 38; 35; 29; 37; 38; 42; 36; 30; 41
Motor brush; 15.27; 5; 28; 10; 0; 9; 16; 15; 8; 10; 6; 15; 5
Type K thermocouple; 21.97; 1; 1; 0; 0; 0; 0; 0; 2; 0; 0; 0; 0

Load .xlsx or .csv

Number format

See what was read

Separate with semicolons or paste straight from a spreadsheet (tabs). With a single usage value it is taken as annual and XYZ is skipped; with 3 or more, as monthly usage.

Class limits

Class A up to% of value

Class B up to% of value

X up to CV

Y up to CV

—Class A items

—

Pareto curve of usage value

Items from highest to lowest annual value, with cumulative percentage. Colors show the class.

Tap the chart to see the values.

ABC × XYZ matrix and suggested policy

Item classification

The report gathers this page's inputs, results, equations, assumptions and references, with fields for project, engineer and revision. In the print dialog, choose Save as PDF.

Method, assumptions and references

Equations used

Annual value = annual usage × unit cost; items sorted from highest to lowest

Class A while the preceding cumulative share < limit A; B up to limit B; C the rest

XYZ: CV = standard deviation ÷ mean of monthly usage; X ≤ X limit < Y ≤ Y limit < Z

Assumptions and limits

Monthly usage (3 or more values) is annualized as mean × 12.
Items critical for safety or line stoppage should keep their own minimum stock regardless of class.

Standards and technical documents

Dickie, H. F. ABC inventory analysis shoots for dollars, not pennies. Factory Management and Maintenance, 1951
Silver, E. A.; Pyke, D. F.; Thomas, D. J. Inventory and Production Management in Supply Chains, 4th ed. CRC, 2017
ASCM (APICS) Dictionary, 17th ed.: ABC classification

U.S. regulations

ASC 330 (Inventory): lower of cost and net realizable value
IRC §471: inventory accounting for tax purposes

Frequently asked questions

How do I build an ABC inventory analysis?

Multiply each item’s annual usage by unit cost, sort from highest to lowest value and compute the cumulative percentage. Items up to 80% of value are A, up to 95% are B, the rest are C.

What is XYZ classification for?

To separate steady items from erratic ones. Combined with ABC, it shows where to use automatic replenishment (AX), where to calculate safety stock (AY, BY) and where to buy only on demand (AZ, CZ).

Are the 80/95 limits mandatory?

No. They are common references. Some companies use 70/90 or classify by item count. What matters is reviewing the classification regularly.

Pareto curve of usage value

ABC × XYZ matrix and suggested policy?

Item classification

Method, assumptions and references

Equations used

Assumptions and limits

Standards and technical documents

U.S. regulations

Frequently asked questions

ABC × XYZ matrix and suggested policy