TY - JOUR
T1 - Multi-criteria ABC inventory classification using DEA-discriminant analysis to predict group membership of new items
AU - Tavassoli, Mohammad
AU - Faramarzi, Gholam Reza
AU - Saen, Reza Farzipoor
PY - 2014
Y1 - 2014
N2 - Inventory management plays a significant role in organisations' success or failure. ABC inventory classification is one of the most popular methods which are regularly applied in inventory management. Correct clustering of inventory items is an important issue of inventory management. The 'annual cost' is an important factor in most of previous studies which applied ABC inventory classification. Each item which has higher annual cost is placed in class A. This paper shows that other factors have significant role for classifying inventory items. We use data envelopment analysis (DEA) to classify inventory items into three groups as A, B, or C in the presence of weight restrictions. Weight restrictions allow for the integration of managerial preferences in terms of relative importance of various factors. Then, to predict group membership of new items, the DEA is incorporated with discriminant analysis (DA). To demonstrate applicability of proposed approach a case study is presented.
AB - Inventory management plays a significant role in organisations' success or failure. ABC inventory classification is one of the most popular methods which are regularly applied in inventory management. Correct clustering of inventory items is an important issue of inventory management. The 'annual cost' is an important factor in most of previous studies which applied ABC inventory classification. Each item which has higher annual cost is placed in class A. This paper shows that other factors have significant role for classifying inventory items. We use data envelopment analysis (DEA) to classify inventory items into three groups as A, B, or C in the presence of weight restrictions. Weight restrictions allow for the integration of managerial preferences in terms of relative importance of various factors. Then, to predict group membership of new items, the DEA is incorporated with discriminant analysis (DA). To demonstrate applicability of proposed approach a case study is presented.
KW - ABC classification
KW - DA
KW - Data envelopment analysis
KW - DEA
KW - DEA-DA
KW - Discriminant analysis
UR - http://www.scopus.com/inward/record.url?scp=84899887410&partnerID=8YFLogxK
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U2 - 10.1504/IJAMS.2014.060904
DO - 10.1504/IJAMS.2014.060904
M3 - Article
AN - SCOPUS:84899887410
SN - 1755-8913
VL - 6
SP - 171
EP - 189
JO - International Journal of Applied Management Science
JF - International Journal of Applied Management Science
IS - 2
ER -