Which inventory management method ranks items based on their value?

The ABC inventory management method is a system that categorizes items based on their value and usage, helping to prioritize inventory management efforts. In this method, items are divided into three categories: A, B, and C. 'A' items are high-value products that contribute a significant portion of overall inventory value but are typically lower in quantity, whereas 'B' items are of moderate value and quantity, and 'C' items are low-value items that make up a large quantity of inventory but contribute less to the overall value.

By ranking items according to their value, the ABC inventory method allows for more focused management and control of inventory resources. This ensures that the most valuable items receive more attention in terms of stock control, reordering, and monitoring, thereby optimizing both inventory costs and service levels.

In contrast, other inventory methods such as par stock, min-max, and physical inventory do not prioritize items based on their monetary value. Par stock focuses on maintaining a consistent level of inventory, min-max sets minimum and maximum stock levels to determine reorder points, and physical inventory involves counting actual stock to assess what is on hand. None of these methods specifically ranks inventory by value like the ABC inventory method does.