Management of Multicriteria Inventory Classification

The most common method that materials managers use for classifying inventory items for planning and control purposes is the annual-dollar-usage ranking method (ABC classification). Recently, it has been suggested that multiple criteria ABC classification can provide a more comprehensive managerial approach, allowing consideration of other criteria such as lead time and criticality. This paper proposes the use of the Analytic Hierarchy Process (AHP) to reduce these multiple criteria to a univariate and consistent measure to consider multiple inventory management objectives.