• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.33 no.4
• /
• pp.69-78
• /
• 2010

Multi-criteria ABC inventory classification is one of the most widely employed techniques for efficient inventory control, and it considers more than one criterion for categorizing inventory items into groups of different importance. Recently, Ramanathan (2006) proposed a weighted linear optimization (WLO) model for the problem of multi-criteria ABC inventory classification. The WLO model generates a set of criteria weights for each item and assigns a normalized score to each item for ABC analysis. Although the WLO model is considered to have many advantages, it has a limitation that many items can share the same optimal efficiency score. This limitation can hinder a precise classification of inventory items. To overcome this deficiency, we propose a context-dependent DEA based method for multi-criteria ABC inventory classification problems. In the proposed model, items are first stratified into several efficiency levels, and then the relative attractiveness of each item is measured with respect to less efficient ones. Based on this attractiveness measure, items can be further discriminated in terms of their importance. By a comparative study between the proposed model and the WLO model, we argue that the proposed model can provide a more reasonable and accurate classification of inventory items.

• Journal of Korean Institute of Industrial Engineers
• /
• v.37 no.4
• /
• pp.358-366
• /
• 2011

Multi-criteria ABC inventory classification, which aims to classify inventory items by considering more than one criterion, is one of the most widely employed techniques for inventory control. The weighted linear optimization (WLO) model proposed by Ramanathan (2006) solves the problem of multi-criteria ABC inventory classification by generating a set of criterion weights for each inventory item and assigning a normalized score to the item for ABC analysis. However, the WLO model has some limitations. First, many inventory items can share the same optimal score, which can hinder a precise classification of inventory items. Second, the model allows too much flexibility in weighting multiple criteria; each item is allowed to choose its own weights so that it can maximize its score. As a result, if an item dominates the others in terms of a certain criterion, it may be classified into a higher class regardless of other criteria by assigning an overwhelming weight to the criterion. Consequently, an item with a high value in an unimportant criterion and low values in others may be inappropriately classified as class A, leading to an inaccurate classification of inventory items. To overcome these shortcomings, we extend the WLO model by using the cross-efficiency method in data envelopment analysis. We claim that the proposed model can provide a more reasonable and accurate classification of inventory items by mitigating the adverse effect of flexibility in the choice of weights and yielding a unique ordering of inventory items.

• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.13 no.21
• /
• pp.61-72
• /
• 1990

In the past, a fundamental technique in inventory control system was to rank the items of a inventory from a distribution by value to draw an ABC curve. Unfortunately the use of ABC categorization technique has created problems and introduced some gross errors into the inventory control system. First, the author considers the possible applications of the technique in the real world and then attempts to discuss ABC fallacies through the literatures. Finally, an inventory categorization algorithm by the principal component analysis is derived and a numerical example is also presented to illustrate the algorithm.

• IE interfaces
• /
• v.5 no.2
• /
• pp.19-27
• /
• 1992

The ABC analysis is a widely used inventory control technique which consists of classifying inventory items into three categories according to annual dollar usage and concentrating managerial efforts on the high value items. But its major weakness is that the classification is somewhat arbitrary and is made in the light of single criterion, the annual usage. In this paper, a modified approach using TOPSIS is proposed where 1) the inventory items are ranked, rather than classified into three categories, in the order of relative importance and 2) the latter is determined by considering the multiple criteria such as annual usage, difficulty of procurement, lead time and shelf life. A case study was performed with the field data from a company producing electronical parts. The rank order produced by TOPSIS was judged quite reasonable by the company inventory control manager.

• Korea Journal of Hospital Management
• /
• v.7 no.3
• /
• pp.63-83
• /
• 2002

This study is to survey the materials purchasing and inventory management status and the characteristics and opinions of the staff in charge of purchasing and inventory of the general hospitals in Busan area in order to contribute to the rationalization of its management through the grasp of actual situation and the presentation of desirable improvement plan for the materials purchasing and inventory management. The status of medical institute had been surveyed by the purchasing/ administration managers of total 26 general hospitals, and the purchasing/ management questionnaires had been commenced with 86 staff of the 26 hospitals. Its major survey results, after the analysis of 24 medical institute statuses (return rate of 92.30%) and 60 staff questionnaires (return rate of 69.76%), are as follows. First, post-purchasing evaluation system is not used actively, orders are being placed by phone or fax, and general merchandise is being purchased through free contracts in most of the hospitals participated in the survey. Second, as per the materials supplying methods, the requisition and delivery system is currently the most popular in the hospitals surveyed, however, both the requisition and delivery system and the par level transfer system are the most desired in the hospitals of more than 500 beds, and the par level transfer system is the most desired in the hospitals under 500 beds for the materials supplying system in the future. Third, as per the inventory management system that is desired the most in the future, the SPD and JIT types are preferred in the hospitals of more than 500 beds, the stockless strategy is preferred in the hospitals under 500 beds, the senior staff above section chief grade prefer the stockless strategy, and the junior staff prefer the ABC classification and SPD types. Fourth, The necessity of purchasing staff's training for the materials management is highly recognized but the effectiveness is not so much acknowledged, which is because such a training is thought to be so superficial and formal that it is not helpful much in the actual field. When summarizing the survey results as above, the materials purchasing and management system is differed for each group of hospitals according to the size of beds, and the more scientific management system is largely required by the general hospitals in Busan city. They also hope the introduction of joint purchasing system, materials management by the bar-code system, and positive execution of the market survey and training of the relevant staff for the management of purchasing affairs. So the more systematic purchasing and inventory management is regarded to be necessary through the introduction of scientific and specialized education of materials management, market survey, and post-purchasing evaluation system also through the computerization of materials purchasing and inventory management as soon as possible.