Segmentation

ABC-XYZ classification — ABC by annual revenue contribution, XYZ by demand variability. Use it to focus planning effort and pick the right forecasting strategy per segment.

ABC-XYZ matrix

X

Steady, predictable demand

Y

Variable, some seasonality

Z

Erratic, hard to forecast

A

Top revenue contributors

AX0
AY0
AZ0

B

Mid revenue

BX0
BY0
BZ0

C

Long tail

CX0
CY0
CZ0

Classification detail

SKU Class Annual revenue Share CoV Recommended model