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ABC analysis in warehouse exercise 1
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Pareto analysis Many people are familiar with the so-called ’80/20 rule’, also known as the Pareto Analysis, which can be put to use with the ABC analysis for inventory management.
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The ABC analysis The ABC approach states that a company should rate items from A to C, basing its ratings on the following rules: A-items are goods which annual consumption value is the highest; the top 70-80% of the annual consumption value of the company typically accounts for only 10-20% of total inventory items.
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The ABC analysis The ABC approach states that a company should rate items from A to C, basing its ratings on the following rules: B-items are the interclass items, with a medium consumption value; those 15-25% of annual consumption value typically accounts for 30% of total inventory items.
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The ABC analysis The ABC approach states that a company should rate items from A to C, basing its ratings on the following rules: C-items are, on the contrary, items with the lowest consumption value; the lower 5% of the annual consumption value typically accounts for 50% of total inventory items.
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Close day to day control
ABC analysis Percentage of items Percentage value of annual usage Class A items About 20% About 80% Close day to day control Class B items About 30% About 15% Regular review Class C items About 50% About 5% Infrequent review
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ABC Analysis A Items 80 – 70 – 60 – 50 – 40 –
Percent of annual dollar usage 80 – 70 – 60 – 50 – 40 – 30 – 20 – 10 – 0 – | | | | | | | | | | Percent of inventory items A Items B Items C Items Figure 12.2
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ABC analysis in warehouse = based on criteria
Frequency of removals (releases) from warehouse. Volume of removals
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Cumulative release share [%] Cumulative goods share [%]
ABC analysis No Item Quantity of releases Release share[%] Cumulative release share [%] group Goods share [%] Cumulative goods share [%] 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. RAZEM: 1 2 4 6 7 8 10 3 5 9
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Cumulative release share [%] Cumulative goods share [%]
No Item Quantity of releases Release share[%] Cumulative release share [%] group Goods share [%duc] Cumulative goods share [%] 1. C 10 25,0 A 10,0 2. D 9 22,5 47,5 20,0 3. B 7 17,5 65,0 30,0 4. I 6 15,0 80,0 40,0 5. F 2 5,0 85,0 50,0 6. G 90,0 60,0 7. H 95,0 70,0 8. E 1 2,5 97,5 9. 100,0 10. J 0,0 TOTAL: 40
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Cumulative release share [%] Cumulative goods share [%]
Analiza ABC - praktyka No Item Quantity of releases Release share[%] Cumulative release share [%] group Goods share [%] Cumulative goods share [%] 1. C 10 25,0 A 10,0 2. D 9 22,5 47,5 20,0 3. B 7 17,5 65,0 30,0 4. I 6 15,0 80,0 40,0 5. F 2 5,0 85,0 50,0 6. G 90,0 60,0 7. H 95,0 70,0 8. E 1 2,5 97,5 9. 100,0 10. J 0,0 TOTAL 40 A: share of releases<= 80% B: 80% - 95% of releases C: others 5%
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ABC analysis
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ABC analysis A B C
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Cumulative item share [%] Cumulative goods share[%]
ABC analysis No Item Number of items item share [%] Cumulative item share [%] GROUP Goods share[%] Cumulative goods share[%] 1. H 3990 66,5 66,50 A 10,0 2. 810 13,5 80,0 20,0 3. I 520 8,67 88,67 B 30,0 4. D 290 4,83 93,50 40,0 5. E 90 1,50 95,00 50,0 6. G 85 1,42 96,42 C 60,0 7. 80 1,33 97,75 70,0 8. 75 1,25 99,0 9. F 60 1,00 100,0 90,0 10. J 0,00 TOTAL: 6000
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ABC analysis No According to frequency of releases
According to volume of releases Item Group 1. C A H 2. D 3. B I 4. 5. F E 6. G 7. 8. 9. 10. J
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Acc.to frequency of releases According to volume of releases
Analiza ABC - praktyka No Item Acc.to frequency of releases According to volume of releases 1. A C 2. B 3. 4. D 5. E 6. F 7. G 8. H 9. I 10. J
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ABC The warehouse has 10 types of pasta: stars, bows, slices, shells, threads, strands, fusilli, triangles, ribbons and bunnies. Each of the pastas is packed in bulk packaging of the same dimensions and weight. 10 orders completed. Each of them corresponded to the issued external edition document. The type of goods and the number of collective packaging issued for subsequent Wz documents are given below. Perform ABC analysis by frequency of releases and volume of releases POINTS : 10
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ABC Wz 1. - shells: 22, fusilli: 4, triangles: 32, ribbons: 1, bunnies: 1045 Wz 2. - stars: 10, shells: 5, fusilli: 1. Wz 3. - shells: 6, fusilli : 2, ribbons: 4. Wz 4. – fusilli: 10. Wz 5. - shells: 15, fusilli: 3, triangles : 48, ribbons:6. Wz 6. stars: 32, bows: 45, shells: 21, threads: 405, strands: 13, fussilli: 7, triangles : 42, ribbons: 15, bunnies: 950. Wz 7. - shells: 39, fusilli: 6. Wz 8. - shells: 9, fusilli: 1, triangles : 76, ribbons: 4. Wz 9. - shells: 10, strands: 17, fusilli: 1, triangles : 22, ribbons: 9. Wz shells: 18, fusilli: 3, triangles : 40, ribbons: 1. .
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Cumulative release share [%] Cumulative goods share [%]
No Item Quantity of releases Release share[%] Cumulative release share [%] group Goods share [%duc] Cumulative goods share [%] 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. RAZEM:
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Cumulative item share [%] Cumulative goods share[%]
No Item Number of items item share [%] Cumulative item share [%] GROUP Goods share[%] Cumulative goods share[%] 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
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