Hi all, I would like to start here with article about methods of classification in ABC-analysis. I tried to find such compilation in Google, but couldn’t, even couldn’t find info about some methods described below.
Introduction
ABC-analysis – one of simple objects classification methods using defined parameter. Although methods that use one parameter limited, ABC-analysis is one of the most popular analytical tool nowadays. Due to this popularity, plenty of algorithms for grouping items in ABC-analysis were developed. This, from the one hand, gives analyst rich choice of methods for different goals and technical resources, but, from the other hand, contains hidden threats in case of wrong usage of varying methods.
Process of ABC-analysis can be divide on five following steps:
- Definition of goals
- Selection of classification parameter
- Data collection and preparation
- ABC-classification
- Interpretation of results
- On first step should be defined analysis goals. They influence on further steps.
- On second step, depending on goals, parameter of objects classification should be chosen.
- Third step contains process of collection and preparation of raw data for analysis.
- Using one of algorithms and chosen parameter on fourth step should be processed ABC-classification.
- On the last step, results can be observed and needed decisions taken.
In this article considered seven most used methods of grouping in ABC-analysis, shown their pros and cons, and in addition comparison of these methods.