X-Y-Z classification is a hybrid inventory segmentation method combining consumption value (X), demand variability (Y), and supply risk or criticality (Z). This classification helps prioritize inventory management efforts. “X” class items typically represent high-value products requiring close monitoring. “Y” focuses on variability, helping determine safety stock levels. “Z” assesses the risk of supply disruptions, guiding contingency planning. This multi-dimensional approach aids inventory optimization by balancing cost, availability, and risk, ensuring resources focus on the most impactful inventory segments.
