Certified Supply Chain Professional (CSCP) Practice Exam

Which of the following best describes the ABC classification method?

1. A system that assigns equal space for all items

2. A method that groups items based on their usage or value

3. A technique for labeling items visually

4. A classification based on supplier quality

The correct answer is: A method that groups items based on their usage or value

The ABC classification method is a widely used inventory management technique that categorizes items based on their usage or value to ensure efficient inventory control. In this method, items are typically divided into three categories: A, B, and C. Category A includes items that are of high value or critical importance, which tend to represent a small percentage of the total items but account for a significant portion of the inventory value. These items require close monitoring and management. Category B contains items of moderate value, requiring a balanced approach to inventory management. Category C consists of low-value items that comprise a large portion of total items but represent a minimal amount in terms of inventory value, allowing for more lenient management practices. This classification helps organizations prioritize their inventory management efforts and optimize their operational efficiency, enabling them to focus resources where they are most needed. The method is particularly useful in supply chain management to ensure that resources are allocated effectively in line with the importance and value of different inventory items. In contrast, the other choices do not accurately capture the essence of the ABC classification method. For instance, assigning equal space for all items overlooks the value-based approach that the ABC method emphasizes. Labeling items visually does not reflect the categorization by value or usage. A classification