Multiple criteria inventory classification using fuzzy analytic hierarchy process

Abstract: A systematic approach to the inventory control and classification may have a significant influence on company competitiveness. In practice, all inventories cannot be controlled with equal attention. In order to efficiently control the inventory items and to determine the suitable ordering policies for them, multi-criteria inventory classification is used. In this paper, fuzzy analytic hierarchy process for multiple criteria ABC inventory classification has been proposed. Fuzzy Analytic Hierarchy process (Fuzzy AHP) is used to determine the relative weights of the attributes or criteria, and to classify inventories into different categories. To accredit the proposed model, it is implemented for the 351 raw materials of switch gear section of Energypac Engineering Limited (EEL), a large power engineering company of Bangladesh. In this approach, at first, related criteria have been selected (Unit price, last year consumption or annual demand, last use date, supplier, criticality, durability) and the weights of these criteria was determined using Fuzzy AHP. Then a score to each item was assigned for each criterion as triangular fuzzy number and the final normalized weighted score of each item using fuzzy set theory is calculate. Finally, Chang’s extent analysis was used for the comparison of fuzzy numbers and the final scores are compared with each other. Then all items were classified into three classes according to their final score.

How to cite this paper

 Kabir, G & Hasin, M. (2012). Multiple criteria inventory classification using fuzzy analytic hierarchy process.International Journal of Industrial Engineering Computations , 3(2), 123-132.

Refrences

Bhattacharya, A., Sarkar, B., & Mukherjee, S.K. (2007). Distance-based consensus method for ABC analysis. International Journal of Production Research, 45(15), 3405-3420.

Boender, C.G.E., de Graan, J.G., & Lootsma, F.A. (1989). Multi-criteria decision analysis with fuzzy pairwise comparisons. Fuzzy Sets and Systems, 29(2), 133–143.

Bozbura, F.T., & Beskese, A. (2007). Prioritization of organizational capital measurement indicators using fuzzy AHP. International Journal of Approximate Reasoning, 44(2), 124-147.

Bozbura, F.T., Beskese, A., & Kahraman, C. (2007). Prioritization of human capital measurement indicators using fuzzy AHP. Expert Systems with Applications, 32(4), 1100-1112.

Braglia, M., Grassi, A., & Montanari, R. (2004). Multi-attribute classification method for spare parts inventory management. Journal of Quality in Maintenance Engineering, 10(1), 55-65.

Buckley, J.J. (1985). Fuzzy hierarchical analysis. Fuzzy Sets and Systems, 17(3), 233-247.

Chang, D.Y. (1992). Extent analysis and synthetic decision. Optimization Techniques and Applications, 1, 352-355.

Chang, D.Y. (1996). Applications of the extent analysis method on fuzzy AHP. European Journal of Operational Research, 95(3), 649-655.

Chase, R. B., Jacobs, F. R., Aquilano, N. J., & Agarwal, N. K. (2006). Operations Management for Competitive Advantage. 11th Edition, McGraw Hill, New York, USA.

Chen, Y., Kilgour, D.M., & Hipel, K.W. (2008a). A case-based distance model for screening in multiple criteria decision aid. OMEGA, 36(3), 373-383.

Chen, Y., Li, K.W., Kilgour, D.M., & Hipel, K.W. (2008b). A case-based distance model for multiple criteria ABC analysis. Computers & Operations Research, 35(3), 776-796.

Csutora, R., & Buckley, J.J. (2001). Fuzzy hierarchical analysis: The Lambda-Max Method. Fuzzy Sets and Systems, 120(2), 181–195.

Flores, B.E., & Whybark, D.C. (1986). Multiple Criteria ABC Analysis. International Journal of Operations and Production Management, 6(3), 38-46.

Flores, B.E., & Whybark, D.C. (1987). Implementing Multiple Criteria ABC Analysis. Journal of Operations Management, 7(1), 79-84.

Flores, B.E., Olson, D.L., & Dorai, V.K. (1992). Management of Multicriteria Inventory Classification. Mathematical and Computer Modeling, 16(12), 71-82.

Guvenir, H.A., & Erel, E. (1998). Multicriteria inventory classification using a genetic algorithm. European Journal of Operational Research, 105(1), 29-37.

Hadi-Vencheh, A. (2010). An improvement to multiple criteria ABC inventory classification. European Journal of Operational Research, 201(3), 962-965.

Jamshidi, H., & Jain, A. (2008). Multi-Criteria ABC Inventory Classification: With Exponential Smoothing Weights. Journal of Global Business Issues, Winter issue.

Kabir, G., & Hasin, M.A.A. (2011). Evaluation of Customer Oriented Success Factors in Mobile Commerce Using Fuzzy AHP. Journal of Industrial Engineering and Management, Article in press.

Kahraman, C., Cebeci, U., & Ruan, D. (2004). Multi-attribute comparison of catering service companies using fuzzy AHP: the case of Turkey. International Journal of Production Economics, 87(2), 171-184.

Lei, Q.S., Chen, J., & Zhou, Q. (2005). Multiple criteria inventory classification based on principal components analysis and neural network. Proceedings of Advances in neural networks, Berlin, 1058-1063.

Liu, Q., & Huang, D. (2006). Classifying ABC Inventory with Multicriteria Using a Data Envelopment Analysis Approach. Proceedings of the Sixth International Conference on Intelligent Systems Design and Applications (ISDA & apos; 06), 1, 1185-1190, Jian, China.

Mikhailov, L. (2003). Deriving priorities from fuzzy pairwise comparison judgements. Fuzzy Sets and Systems, 134(3), 365-385.

Nahmias, S. (2004). Production and Operations Analysis. 5th Edition, Irwin/McGraw Hill, Burr Ridge, IL, USA, 213-215.

Ng, W.L. (2007). A simple classifier for multiple criteria ABC analysis. European Journal of Operational Research, 177(1), 344-353.

Partovi, F.Y., & Burton, J. (1993). Using the analytic hierarchy process for ABC analysis. International Journal of Production and Operations Management, 13(9), 29-44.

Partovi, F.Y., & Anandarajan, M. (2002). Classifying inventory using and artificial neural network approach. Computers & Industrial Engineering, 41(4), 389-404.

Ramanathan, R. (2006). ABC inventory classification with multiple-criteria using weighted linear optimization. Computers & Operations Research, 33(3), 695-700.

Saaty, T.L. (1980). The analytic hierarchy process. New York, NY: McGraw-Hill.

Saaty, T.L. (1998). The Analytic Hierarchy Process: Planning, Priority Setting, Resource Allocation. Pittsburgh: RWS Publications.

?imunovi?, K., ?imunovi?, G., & ?ari?, T. (2009). Application of Artificial Neural Networks to Multiple Criteria Inventory Classification. Strojarstvo, 51(4), 313-321.

Wang, Y.M., Yang, J.B., & Xu, D.L. (2005). A two-stage logarithmic goal programming method for generating weights from interval comparison matrices. Fuzzy Sets Systems, 152, 475-498.

Xu, R. (2000). Fuzzy least square priority method in the analytic hierarchy process. Fuzzy Sets and Systems, 112(3), 395-404.

Yu, M.C. (2011). Multi-criteria ABC analysis using artificial-intelligence-based classification techniques. Expert Systems with Applications, 38(4), 3416-3421.

Zadeh, L.A. (1965). Fuzzy sets. Information and Control, 8(3), 338-353.

Zhou, P., & Fan, L. (2007). A note on multi-criteria ABC inventory classification using weighted linear optimization. European Journal of Operational Research, 182(3), 1488-1491.