Question

Compare and contrast ABC Analysis (Value-based) and VED Analysis (Criticality-based).
How can a store manager integrate these two distinct approaches into an ABC-VED Matrix
for optimal resource allocation?

05 Aug 2026
Answer :
Word Count : 592
ABC Analysis and VED Analysis are two important techniques used in inventory and stores management for classifying inventory items and controlling them according to their importance. Although both methods aim to improve inventory control, they use different criteria. ABC Analysis is value-based, whereas VED Analysis is criticality-based. Combining both provides a more comprehensive basis for inventory management. ABC Analysis classifies inventory according to the annual consumption value, which is calculated by multiplying the annual quantity consumed by the unit cost. A-items constitute a small percentage of total items but account for a large proportion of inventory value, usually around 70–80%. These items require strict control, accurate forecasting, frequent review and close supervision. B-items have moderate value and require moderate control. C-items represent a large number of items but account for a relatively small share of total inventory value. They can therefore be managed through simpler procedures and less frequent review. VED Analysis, on the other hand, classifies items according to their functional or operational criticality. Vital (V) items are essential because their
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