Flexible ABC Inventory Classification

Abstract

ABC inventory classification is a well-known approach to assign inventory item into A, B, and C groups based on their sales and usage volume. This helps inventory management become more efficient. Behind its advantage, it usually shows some problems with an inventory budget and warehouse space because the ABC assignment of SKUs are mad e without an inventory budget and space available involved. In this paper, the ABC group under restricted of an inventory budget and warehouse space to maximize the profit with optimal service level is presented. We establish this proposed model to enhance the existing ABC approach to be more applicable in real life, which has the limited inventory budget and warehouse space. Keywords: ABC Inventory Classification; Inventory Management