ABC Inventory Classification Based on Multicriteria Optimization

Abstract

Classifying the items in an inventory is the necessary method in inventory management, and the ABC classification is the most popular most popular scheme to classify the items in inventory. The annual dollar usage is utilized in classical ABC classification as the single criterion and the other potential criteria are not taken into account. Currently the multicriteria inventory classification problem draws much more attentions than ever before and is the key in the research of inventory management. A kind of inventory classification scheme based on multicriteria optimization is proposed in this paper according to the characters of multicriteria inventory classification problem. At first, the item which will receive the most management attention is selected consider the decision maker's preference. During the selection of the most preferred item the multicriteria optimization procedure is performed. Then genetic algorithm was designed to specify the weights of the criteria. At last the muticriteria inventory classification problem convert to a single criterion inventory classification problem and the classical ABC classification can be used. Simulation experiments based on practical data show the effectiveness of the proposed classification scheme and genetic algorithm.