VED analysis classifies stores items based on:

1. VED stands for Vital, Essential, and Desirable. 2. The classification is based on the criticality of the item to operations rather than value or volume. 3. Vital items can halt production if absent; essential cause disruption; desirable cause inconvenience. 4. ABC analysis, by contrast, uses annual value to classify items. _Source: ICAI BoS Inter Paper 3, Ch 2 "Material Cost", §2.4.7 ¶1-2_