What is ABC classification? Briefly explain the basic principle of ABC classification.

ABC classification, also known as Pareto analysis, also known as primary and secondary factor analysis, is a commonly used method in project management. It is an analytical method to classify and queue things according to their main technical or economic characteristics, to distinguish between key and general, and to determine different management modes. Because it divides the objects of analysis into three categories: A, B and C, it is also called ABC analysis.

Basic principle: among many factors that determine a thing, distinguish between primary and secondary factors, and find out a few key factors that play a decisive role in it and most secondary factors that have little influence on it. Later, Pareto method was continuously applied to all aspects of management.

Extended data

Draw ABC analysis diagram:

Taking the cumulative project percentage as the abscissa and the cumulative capital occupation percentage as the ordinate, according to the data provided by the third and eighth columns of ABC analysis table, take points on the coordinate map, connect the curves of each point, and draw ABC curve.

According to the data corresponding to the ABC analysis curve and the ABC analysis table, determine the three categories of A, B and C, and mark the methods of A, B and C on the diagram to make the ABC analysis diagram. In management, if the ABC analysis chart is still not intuitive, it can also be drawn as a histogram. According to the results of ABC classification, the management intensity and economic effect are weighed, and the ABC classification management standard table is formulated.

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