Multi-criteria ABC inventory classification with mixed quantitative and qualitative criteria

Abstract

Large firms usually employ the well-known ABC inventory classification technique to have an efficient control on a huge amount of inventory items. While the traditional inventory classification method only considers one criterion, namely the annual dollar usage to classify inventory items, the recent literature shows a focus on multi-criteria inventory classification (MCIC) techniques. Surprisingly, among several methods that have been developed for the MCIC problem, there are just a few, which clearly account for qualitative criteria, while most of the affecting criteria are of qualitative type in nature. This paper presents a modified linear optimisation method that enables inventory managers to classify a number of inventory items in the presence of both qualitative and quantitative criteria without any subjectivity. Furthermore, an efficient procedure is proposed to maximise the minimum importance attached to various criteria leading to improvement of discriminating power among inventory items. For validating the proposed method, it is applied on a case study taken from the literature and a comparative study with the existing competent methods is also provided.

Keywords:

• multi-criteria ABC inventory classification
• quantitative and qualitative criteria
• DEA