Multi-criteria ABC classification: types of criteria and their effects on weights assignment
Abstract
ABC classification is traditionally performed in companies in order to define and implement an inventory control policy for all the products within the same category. The classification of products into categories is done according to their importance or relevance for some kind of criteria, usually the consumption or annual usage (for raw materials or spare parts) or demand or annual sales (for finished goods) using the well-know Pareto´s principle. However, sometimes it is highly recommended and necessary to use additional criteria in order to make a more effective differentiation of stocks. Therefore, this paper presents a collection of useful criteria for ABC classification; describes its meaning and how it must be measured. Additionally, an example of a critical stage of a classification ABC with three criteria, shows that depending on the weights assigned and the characteristics of the products included in the classification process, the validity of some criteria are lost in the analysis.
Downloads
References
[2] V. Pareto, Mannual of Political Economy (English translation). New York: A. M. Kelley Publishers, 1971.
[3] P. Swamidass, Encuclopedia of Production and Manufacturing Management. Norwell, MA: Kluwer Academic Publishers, 2000.
[4] B. Flores and C. Whybark, “Multi Criteria ABC Analysis,” International Journal of Operations and Production Management, vol. 6, no. 3, pp. 38-46, 1986.
[5] B. E. Flores and D. C. Whybark, “Implementing multiple criteria ABC analysis,” Journal of Operations Management, vol. 7, no. 1-2, pp. 79-85, Oct. 1987.
[6] F. Y. Partovi and J. Burton, “Using the Analytic Hierarchy Process for ABC Analysis,” International Journal of Operations & Production Management, vol. 13, no. 9, pp. 29-44, 1993.
[7] R. Ernst and M. A. Cohen, “Operations related groups (ORGs): A clustering procedure for production/inventory systems,” Journal of Operations Management, vol. 9, no. 4, pp. 574-598, 1990.
[8] F. Y. Partovi and M. Anandarajan, “Classifying inventory using an artificial neural network approach,” Computers & Industrial Engineering, vol. 41, no. 4, pp. 389- 404, Feb. 2002.
[9] H. Altay Guvenir, “Multicriteria inventory classification using a genetic algorithm,” European Journal of Operational Research, vol. 105, no. 1, pp. 29-37, Feb. 1998.
[10] Q. Lei, J. Chen, and Q. Zhou, “Multiple Criteria Inventory Classification Based on Principal Components Analysis and Neural Network,” Methods, pp. 1058- 1063, 2005.
[11] R. Ramanathan, “ABC inventory classification with multiple-criteria using weighted linear optimization,” Computers & Operations Research, vol. 33, no. 3, pp. 695-700, Mar. 2006.
[12] P. Zhou and L. Fan, “A note on multi-criteria ABC inventory classification using weighted linear optimization,” European journal of operational research, vol. 182, no. 3, pp. 1488–1491, 2007.
[13] A. Hadi-Vencheh, “An improvement to multiple criteria ABC inventory classification,” European Journal of Operational Research, vol. 201, no. 3, pp. 962-965, Mar. 2010.
[14] W. Ng, “A simple classifier for multiple criteria ABC analysis,” European Journal of Operational Research, vol. 177, no. 1, pp. 344-353, Feb. 2007.
[15] C. Chu, G. Liang, and C. Liao, “Controlling inventory by combining ABC analysis and fuzzy classification,” Computers & Industrial Engineering, vol. 55, no. 4, pp. 841-851, Nov. 2008.
[16] O. Parada, “Un enfoque multicriterio para la toma de decisiones en la gestión de inventarios,” Revista Cuadernos de Administración, Vol. 22 No. 38, pp. 169- 187, enero-junio de 2009.
