Multicriteria ABC Inventory Classification Using the Social Choice Theory

Fan Liu and Ning Ma
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Fan Liu: School of Management & Engineering, Nanjing University, Nanjing 210000, China
Ning Ma: School of Management & Engineering, Nanjing University, Nanjing 210000, China

Sustainability, 2019, vol. 12, issue 1, 1-19

Abstract: The multicriteria ABC inventory classification has been widely adopted by organizations for the purpose of specifying, monitoring, and controlling inventory efficiently. It categorizes the items into three groups based on some certain criteria, such as inventory cost, part criticality, lead time, and commonality. There has been extensive research on such a problem, but few have considered that the judgments about criteria’s importance order usually exhibit a substantial degree of variability. In light of this, we propose a new methodology for handling the multicriteria ABC inventory classification problem using the social choice theory. Specifically, the pessimistic and optimistic results for all possible individual judgments are obtained in a closed-form manner, which are then balanced by the Hurwicz criterion with a “coefficient of optimism”. The CRITIC (Criteria Importance Through Intercriteria Correlation) method is used to aggregate the individual judgments into a collective choice, according to which the items are classified into Groups A, B, and C. Through a numerical experiment, we show that the proposed methodology not only considers all possible preferences among the criteria, but also generates flexible classification schemes.

Keywords: ABC inventory classification; Hurwicz criterion; preference; social choice (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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