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this video will demonstrate how to do ABC analysis or ABC classification uh the idea behind ABC analysis or classification is to organize your inventory and identify those items that constitute a high value of your inventory and need to be tracked much more closely than those uh uh parts of your inventory that do not uh account for a whole lot of money so instead of treating all of your inventory items as equal there are certain inventory items that uh constitute a large percentage of your inventory the the dollar value and therefore those should be tracked much more closely than those that donamp;#39;t constitute a whole lot of uh value in regards to your inventory and the way you do that is first of all itamp;#39;s a combination of the demand the quantity and uh and the cost uh in other cases um if the demand is fairly equal then some companies will concentrate just on the cost uh or if there is difficulties in ordering certain items um they may use those so there are variations to