ABC Classification (Pareto Analysis) in Forecast Pro TRAC

tipsandtricks

ABC classification, also known as Pareto analysis, is a useful method for classifying forecast items based on their relative importance to the organization. Many companies adopt different procedures for creating, reviewing and monitoring forecasts based upon an item’s classification. This enables the forecasting team to focus its efforts on those items which have the greatest impact to the organization.

Items are typically categorized as follows:

  • A: important high volume items
  • B: medium volume items
  • C:  slow moving items

Continue reading

Understanding Pareto (ABC) Analysis

101cIn the 19th century Dr. Wilfredo Pareto, an Italian economist, gave birth to the “80/20 rule” when he observed that 80% of the country’s wealth was held by 20% of the population. Today, many organizations find that the 80/20 rule (or a similar ratio) applies to their products—80% of their revenue comes from 20% of their products.

Continue reading