ABC classification according to Pareto’s principle: a hybrid methodology

Siamak Kheybari (), S. Ali Naji (), Fariba Mahdi Rezaie () and Reza Salehpour ()
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Siamak Kheybari: Ferdowsi University of Mashhad
S. Ali Naji: Ferdowsi University of Mashhad
Fariba Mahdi Rezaie: Ferdowsi University of Mashhad
Reza Salehpour: Sharif University of Technology

OPSEARCH, 2019, vol. 56, issue 2, No 8, 539-562

Abstract: Abstract So far, many methods have been proposed to classify items based on ABC analysis, but the results of these methods have had relatively low compliance with the principles of ABC. More precisely, collective value and sometimes the number of items belonging to each category in the methods provided do not meet the basic requirements of ABC called Pareto’s principle. In this study, a number of hybrid methodologies including Shannon’s entropy, TOPSIS (the technique for order preference by similarity to ideal solution) and goal programming are respectively used for determining the weight of criteria which are effective in the inventory items classification, calculations of each item value and its classification based on Pareto’s principle. To this end, the value of each item as well as classification of inventory items is calculated based on Pareto’s principle. The performance of the proposed method is evaluated through (1) statistical analysis, (2) checking the percentage of similarity with other methods and (3) comparison with another method in terms of the number and value allocated to each class. The results confirm the capability of the listed method.

Keywords: ABC analysis; Inventory items classification; Shannon’s entropy; TOPSIS; Goal programming (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s12597-019-00365-4

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