VED ANALYSIS: V stands for vital, E for essential, D for desirable.

This classification is usually applied for spare parts to be stocked for maintenance of machines and equipments based on the criticality of the spare parts. The stocking policy is based on the criticality of the items. The vital spare parts are known as capital or insurance spares. The inventory policy is to keep at least one number of the vital spare irrespective of the long leadtime required for procurement. Essential spare parts are those whose non-availability may not adversely affect production. Such spare parts may be available from many sources within the country and the procurement lead time many not be long. Hence, a low inventory of essential spare parts is held. The desirable spare parts are those, which, if not available, can be manufactured by the maintenance department or may be procured from local suppliers and hence no stock is held usually. HML
H-M-L analysis is similar to ABC analysis except for the difference that instead of usage value, price criterion is used. The items under this analysis are classified into three groups that are called high, medium and low. To classify, the items are listed in the descending order of their unit price. The management for deciding three categories then fixes the cut-off-lines. For example, the management may decide that all items of unit price above Rs. 1000/-will of H category, those with unit price between Rs. 100/- to Rs.1000/- will be of M category and those having unit price below Rs. 100/- will be of L category. HML analysis helps to Assess storage and security requirements To keep control over consumption at the departmental head level Determine the frequency of stock verification To evolve buying policies to control purchase To delegate authorities to different buyers to make petty cash purchase

FSN F-S-N analysis is based on the consumption figures of the items. The items under this analysis are classified into three groups: F (fast moving), S (slow moving) and N (non-moving). To conduct the analysis, the last date of receipt or the last date of issue whichever is later is taken into account and the period, usually in terms of number of months, that has elapsed since the last movement is recorded. Such an analysis helps to identify: Active items which require to be reviewed regularly Surplus items whose stocks are higher than their rate of consumption; and Non-moving items which are not being consumed

XYZ X-Y-Z analysis is based on value of the stocks on hand (i.e. inventory investment). Items whose inventory value are high are called as X items while those inventory value are low are called Z items. And Y items are those which have moderate inventory stocks. Usually X-Y-Z analysis is used in conjunction with either ABC analysis or HML analysis. XYZ analysis helps to identify a few items, which account for large amount of money in stock and take steps for their liquidation/retention. XYZ when combined with FSN analysis helps to classify non-moving items into XN, YN, and ZN group and thereby identify a handful of non-moving items, which account for bulk of non-moving stock. These can be studied individually in details to take decision on their disposal or retention.

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