In inventory management it must be avoided some inventory errors or cheap public storage that exist in the company. If there is an error in determining the inventory, it will have an adverse effect on the company. If the inventory setting is too small, the opportunity to sell the product will be lost and the expected profit will not be achieved. But when management specifies that inventory is too large, this can cause costs that are too large so that the profits obtained are also smaller. If the company wants to increase profits, they have to add inventory in the company. In a business, a company is a determinant of purchases, the company will influence the economy of production, affect the purchase and fulfill consumer orders quickly.
In this classification, inventories that have an annual amount or volume with a high rupiah value. In class A, inventory has about 70% of total inventory even in amounts that are around 20% of the total items available. Inventory intended in this class requires a higher attention in its procurement, this is because the procurement will have a high enough cost so that supervision should be high enough. This class classification is a classification of inventories that have an annual volume in medium rupiah. In this group the inventory will represent around 20% of the annual inventory value and about 30% of the total inventory. In this class, techniques for more moderate control will be needed.
This classification is the classification of an item with an annual volume value in rupiah that is low and represents around 10% of the total value of inventory. This consists of 50% of the total available inventory value. In this classification, a simple control technique is needed and is only done once. The availability of inventory in a company or factory inevitably must have its own storage area. If the company buys raw materials only for the production process, for example only for one production, this will increase the cost of raw materials.