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Development of an Analytic Hierarchy Process Model for the Multi-item Inventory Control  

Kim Sung-Kyu (Materials Management Team, STC Co., Ltd.)
Lee Ji-Soo (Dept. of Industrial & Systems Engineering, Kumoh National University of Technology)
Kim Jeong-Seob (Dept. of Management, Daegu University)
Publication Information
Journal of Korean Society of Industrial and Systems Engineering / v.27, no.4, 2004 , pp. 110-116 More about this Journal
Abstract
ABC analysis is the process of dividing inventory items into three classes according to their monetary usage so that managers can focus on items that have the highest monetary usage value, and has been widely used in practice since its development in 1950. However, the original criterion, monetary usage value, can no longer be the only rational criterion. Applying Analytic Hierarchy Process, we develop a new method to classify inventory items by considering such operationally/strategically important criteria as annual dollar usage, lead time, supplier's capacity, defective rate, difficulty of purchasing and unit price. A case study is performed applying the method to the field data from a company which produces electrochemical products.
Keywords
ABC analysis; inventory; AHP;
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