ABC Classification Inventory is a tool used in inventory management and analysis to control the flow of products. This technique categorizes products according to their value and importance – A, B and C items. From a business perspective, using ABC classification helps reduce costs associated with managing inventory, while increasing efficiency and profits. By strategically allocating resources to each type of item, organizations can reduce stock levels and optimize inventory turnover. Additionally, it helps managers plan better for ordering and stocking activities, as well as forecasting demand accurately for each product category.