How do you use ABC classification system to classify inventory items?

The ABC classification system categorizes inventory items into three groups based on their importance and value. "A" items are high-value items with low inventory levels, requiring tight control and frequent review; "B" items are moderate in both value and quantity, needing regular monitoring; and "C" items are low-value items with high inventory levels, which can be managed with simpler controls. This classification helps prioritize inventory management efforts, ensuring that resources are allocated efficiently to maintain optimal stock levels.