Post on 06-Jul-2018
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ABC Analysis for
InventoryMichael Iosua
MBA 530, Dr. Foster Class of 2009
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Brainstormin% /ercise
#hich items contriute most to your!ollar volume$
#hat is your inventory control metho!$
(o) much inventory is )aste! !ue tolac* of inventory control$
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Dra)ac*s of ABC Analysis forInventory
8ess control over B an! C, etc. items &ot an +allurose- inventory controlmetho!
:rofit not necessarily ma/imi6e!
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(o) !oes ABC analysis )or*$tes in ABC Analysis;
". Determine the !ollar volume2. an* items.
3. Calculate the ercenta%e !ollar volume
for each item.
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(o) !oes ABC analysis )or*$
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A +eal #orl!- /amle
amMart :ro!uceDeartment
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amMart :ro!uce Det.
Continually !ums ro!uce !ue tosoila%e
(as !ifficulty *eein% its stoc* current
Must re!uce soila%e costs
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amMart :ro!uce Det.
:ro!uct :oun!s ol! Cost>l ? 7alue
Man%oes 10 ? '.00
8ettuce "000 ? ".00
Bananas 500 ? .5
@omatoes "000 ? 2.00
@otals "00
amMart :ro!uce Det.
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te ne; Determine !ollar value
:ro!uct :oun!s ol! Cost>l ? 7alue
Man%oes 150 ? '.50 ? 2925.00
8ettuce "950 ? .50 ? 95.00
Bananas 2500 ? .10 ? "500.00
@omatoes 900 ? .90 ? 4"0.00
@otals 1000 ? 12"0.00
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te @)o; an* Items
an* :ro!uct ? 7alue of ?Cum of ?value
Cum of units Class
" Man%oes ? 2925
2 Bananas ? "500
3 8ettuce ? 95
' @omatoes ? 4"0
@otals ? 12"0
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te @hree; Calculate ercenta%eof total !ollar volume for each item
an* :ro!uct ? 7alue of ?Cum of ?value
Cum of units
Class
" Man%oes ? 2925 '."
2 Bananas ? "500 2'.2
3 8ettuce ? 95 "5.
' @omatoes ? 4"0 "3.0
@otals ? 12"0 "00.0
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te Four; Determine cumulativeercenta%es
an* :ro!uct ? 7alue of ?Cum of ?value
Cum of units Class
" Man%oes ? 2925 '." '." "0.4
2 Bananas ? "500 2'.2 ".3 52.5
3 8ettuce ? 95 "5. 4.0 45.0' @omatoes ? 4"0 "3.0 "00.0 "00.0
@otals ? 12"0 "00.0
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ABC Analysis /ercise
arnhar!t AutoMart ells )ater um, timin% elt, oil filter,
uart of oil
&ee!s to imrove inventory control
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arnhar!t AutoMart
:ro!uct Items sol! Cost er item ? 7alue
#ater :um "0 ? "50
@imin% elt "0 ? 50
il filter 50 ? "5
il uart "00 ? 3
@otals "0
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Further ea!in%s Bhattacharya, AriitE ar*ar, BianE Mu*heree, anat.
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Further ea!in%s
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Aen!i/
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eferences Fuerst, #illiam . MA88 BHI& G@ A &#
8J A@ ABC A&A8I F I&7&@
C&@8. Journal of Small Business Management ,'5
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arnhar!t AutoMart
:ro!uct Items sol! Cost er item ? 7alue
#ater :um "0 ? "50
@imin% elt "0 ? 50
il filter 50 ? "5
il uart "00 ? 3
@otals "0
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te ne; Determine !ollar value
:ro!uct Items sol! Cost er item ? 7alue
#ater :um "0 ? "50 ? "500
@imin% elt "0 ? 50 ? 500
il filter 50 ? "5 ? 50
il uart "00 ? 3 ? 300
@otals "0 ? 3050
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te @)o; an* Items
an* :ro!uct ? 7alue of ?Cum of ?
value
Cum of units
Class
" #aterum
? "500
2 il filter ? 50
3 @imin%elt
? 500
' il uart ? 300
@otals ? 3050
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te @hree; Calculate ercenta%eof total !ollar volume for each item
an* :ro!uct ? 7alue of ?
Cum
of ?value
Cum of units Class
" #aterum
? "500 '9.2
2 il filter ? 50 2'.1
3 @imin%elt
? 500 "1.'
' il uart ? 300 9.4
@otals ? 3050 "00.0
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te Four; Determine cumulativeercenta%es
an* :ro!uct ? 7alue of ?
Cum
of ?value
Cum of units Class
" #aterum
? "500 '9.2 '9.2 5.9
2 il filter ? 50 2'.1 3.4 35.3
3 @imin%elt ? 500 "1.' 90.2 '".2
' il uart ? 300 9.4 "00.0 "00.0
@otals ? 3050 "00.0
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te Five; Classify items
an* :ro!uct ? 7alue of ?
Cum
of ?value
Cum
of units Class
" #aterum ? "500 '9.2 '9.2 5.9 A
2 il filter ? 50 2'.1 3.4 35.3 B
3 @imin%elt ? 500 "1.' 90.2 '".2 C
' il uart ? 300 9.4 "00.0 "00.0 D
@otals ? 3050 "00.0