Journal
COMPUTERS & OPERATIONS RESEARCH
Volume 35, Issue 3, Pages 776-796Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.cor.2006.03.024
Keywords
inventory management; ABC analysis; multiple criteria decision aid; case-based distance model; Euclidean distance
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In ABC analysis. a well-known inventory planning and control technique, stock-keeping units (SKUs) are sorted into three categories. Traditionally. the sorting is based solely on annual dollar usage. The aim of this paper is to introduce a case-based multiple-criteria ABC analysis that improves on this approach by accounting for additional criteria, such as lead time and criticality of SKUs. thereby providing more managerial flexibility. Using decisions from cases as input, preferences over alternatives are represented intuitively using weighted Euclidean distances which can be easily understood by a decision maker. Then a quadratic optimization program finds optimal classification thresholds. This system of multiple criteria decision aid is demonstrated using an illustrative case study. (c) 2006 Elsevier Ltd. All rights reserved.
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