VED Analysis:

VED i.e. Vital, Essential and Desirable analysis is a technique employed for spare part inventory analysis and is broadly used in the automobile industry particularly for the maintenance of the spare parts inventory. As per this technique, inventory items are categorized as:

• Vital (V) items constitute such items of inventory that are very important for continuous operations. Absence or shortage of these items will bring the production activity to a halt. Such items of inventory are serious for continuous production and thus need close monitoring.
• Essential (E) items are those items of inventory that are necessary for continuous production. The dissimilarity between essential and vital items is which the shortage of essential items can be tolerated for some hours that are: this will not bring the production process to a halt. The level of this category of inventory is moderately low.
• Desirable (D) items don't have any instantaneous impact on the production process, thus inventory of these items may not or may be kept.

In above VED analysis the focus is not only on the value of the inventory, although the focus is on their probably impact on production.