ABC analysis is a basic tool for analysing the characteristics of a range of items at an aggregate level. In this note the applications of ABC analysis to two important areas of inventory management is considered:( 1 ) the estimation of aggregate inventory characteristics, and ( 2 ) designing individual item decision models using ABC classification. A basic discussion of the ABC classification for a multi?item inventory system is provided. Three methods are discussed for obtaining aggregate characteristics. A general discussion on the design of individual item decision models is given in which the different degree of controls necessary for each class of items are emphasized.