Application of AHP to multicriteria inventory classification
Author(s)
Advisor
Date
1993Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
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Abstract
In this thesis, a new method based on the application of Analytic
Hierarchy Process (AHP) to ABC inventory classification is investigated. The
traditional ABC classification method utilizes only the unit price and the annual
usage of inventory items. However, in some cases, the classification done using
only these two criteria turns out to be insufficient. The method described in this
thesis enables the integration of several criteria that can be organized in a
hierarchy into ABC classification.
The method can be summarized as follows: A matrix is constructed by
the pairwise comparison of criteria on the highest level. The elements of the
eigen vector of this matrix represent the weights (priorities) of the criteria. If a
criterion has subcriteria in the hierarchy, the weights computed in the similar
manner for the subcriteria are multiplied by the weight of the criterion and
inserted in its place. Repetition of these steps for aU levels of the hierarchy, the
weight of all criteria are determined. Using the criteria weights determined by the AHP technique, the
weighted score of each inventory item is computed. The items sorted by that
weighted score are grouped in three classes: A, B, and C, as in the classical
ABC classification.
This new method is applied to the classification of inventory items used
in rock excavation jobs done using blasting by a construction company. The
same inventory is also classified according to the classical ABC technique, and
the results are compared.