ABC Analysis Using Analytic Hierarchy Process

In any manufacturing organization, the traditional ABC analysis for selective inventory control represents the relationship between the volume and annual consumption value of the inventory items. The procedure of classifying inventory items into ‘A’, ‘B’ and ‘C’ categories needs to be constantly and carefully attentive to how well it will interpret the relevant data with multiple criteria and conflicting objectives. Perhaps the most creative and difficult task in making a decision is to choose the dominant criteria along with the other related sub-criteria and search out the fact that how those are important deciding factors in selecting the ‘A’, ‘B ’ and ‘C’ class of items. This paper highlights a distinct methodology to analyze the ‘A' ‘B' and ‘C ’ items using the pair-wise comparison matrices of the analytic hierarchy process (AHP) technique, which ensures the consistency of the decision maker’s judgments regarding the importance of one criteria over another to find out the weightage value for each of the considered criteria and sub-criteria. The developed approach is illustrated using real time data and validated with the theoretical results.