LIMITATIONS OF ABC ANALYSIS

However ABC analysis is a basic tool for exercising selective control over many inventory items, it does not, in its current form, allow precise consideration of all relevant troubles of inventory management. For illustration, a never-ending trouble in inventory management is that of sufficiently handling thousands of low-value `C' items. Low-value purchases often require more items and thereby decrease the time allowance accessible to purchasing personnel for value analysis, vendor investigation, and other `B' items.

Moreover, if ABC analysis is not periodically evaluated and updated, the very approach of control might be defeated. For illustration,`C' items similar to diesel oil in a firm, will become most high-value items throughout power crisis should, hence, deserve more attention, though this point might be overlooked when classification of items is not evaluated and updated.