• ABC Analysis in Retail Merchandising and Assortment Planning:
• Methodology: ABC analysis applies Pareto's 80/20 principle to evaluate the performance of individual Stock Keeping Units (SKUs) in an inventory assortment:
• Category A: Top $10 - 20\%$ of SKUs accounting for $\approx 70 - 80\%$ of total sales revenue (must never stock out).
• Category B: Intermediate $20 - 30\%$ of SKUs contributing $\approx 15 - 20\%$ of revenue.
• Category C: Remaining $50\%$ of SKUs generating only $5 - 10\%$ of revenue (low-velocity candidates for clearance).
• Conclusion: Performance of individual SKU's in the assortment plan (Option 1).

Correct option: (1) Performance of individual SKU's in the assortment plan