The ABC-XYZ analysis is an algorithm to classify your products and then recommends how to handle:
- Degree of automation replenishment processes
- Buffer Stock
- Inventory Control
Products are classified by:
- Volume → ABC (high, medium, low consumption)
- Volume Predictability / Reliability → XYZ (Linear demand, Unpredictable demand, Variable demand)
Each combination (AX, BX, CY..) implies a suggested way to manage inventory: identify products at risk (rupture and overstock), define the right stock / security stock coverage, optimize production volumes