What is the ABC and VED classification of inventory? List the types of Inventory.

ABC and VED classification are inventory management techniques used to prioritize items based on their importance and criticality:

1. ABC Classification:
   ABC classification categorizes inventory items into three groups based on their value and significance to the organization:

   • A items: These are high-value items that represent a significant portion of the inventory's total value but constitute a small percentage of the total number of items. They require tight control and frequent monitoring due to their high cost and impact on profitability.
   • B items: These are moderate-value items that are important but not as critical as A items. They typically represent a moderate portion of the inventory's total value and may require periodic monitoring and management.
   • C items: These are low-value items that represent a large percentage of the total number of items but contribute relatively little to the inventory's total value. They require minimal control and can often be managed with less frequent monitoring.

2. VED Classification:
   VED classification categorizes inventory items based on their criticality and importance for operations:

   • V items (Vital): These are items that are crucial for the organization's operations and have a significant impact on production or service delivery. They are characterized by their criticality, and stockouts of V items can lead to severe consequences such as production delays or service disruptions.
   • E items (Essential): These are items that are essential for operations but may have substitutes or alternatives available. While stockouts of E items may cause inconvenience, they are not as critical as V items.
   • D items (Desirable): These are items that are desirable but not essential for operations. Stockouts of D items may have minimal impact on operations as they are typically non-critical or can be easily substituted.

Types of Inventory:

1. Raw Materials
2. Work-in-Progress (WIP)
3. Finished Goods
4. Maintenance, Repair, and Operating (MRO) Supplies
5. Goods in Transit
6. Safety Stock
7. Cycle Stock
8. Anticipation Inventory
9. Speculative Inventory
10. Dead Stock

Each type of inventory serves a specific purpose within the supply chain, and effective management of these inventories is essential for optimizing operations, minimizing costs, and meeting customer demand.