Here we first classify products by using ABC analysis, that is, the most valuable products are A, less valuable products are B, and the least valuable products are C. Then, within each classification, we further categorize them by xyz, that is, products within “A” classification are categorized by “x” (products with very little variation), “y” (products that have some variation), and “z” (products that have most variation). The more variation there is in the sales data of a product, the more difficult it is to forecast.

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ABC Classification
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Account Based Forecasting (ABF)