2. What is the ABC inventory system, and how is it used to manage inventory?The inventory items that are the most important for a specific industry or firm should be those that account for the greatest dollar value. To determine which items these are, two variables must be considered: unit cost of each item and item demand. Inventory items can be classified into "A" items, which have a high-dollar usage, "B" items, which have an immediate-dollar usage, and "C" items, which have a low-dollar usage. In other words, those items that are the most demanded and most costly are the most important inventory items, and the items that are the slowest moving and least expensive are least important