An Inventory management system in which all items of inventory are classified into three categories i.e. A, B and C based on their value and quantity. Category A contains the items with higher value and low quantity. Category "B" consists of items with relatively low value and greater quantity and the remaining items of inventory are categorized as "C" category. This method helps company to identify the most important items in inventory with ease. Companies handle each category with slightly different way for example more importance is given to the category 'A' then less to 'B' and relatively less to category 'C'