Classification of the items in an inventory in decreasing order of annual dollar volume. This array is then split into three or more classes, called A, B, and C, etc. Class A contains the items with the highest annual dollar volume and receives the most attention. The medium Class B receives less attention, and Class C, which contains the low-dollar volume items, is controlled routinely. The ABC principle is that effort saved through relaxed controls on low-value items will be applied to reduce inventories of high-value items. Syn: distribution by value.