Controlling inventory by combining ABC analysis and fuzzy classification

The objective of inventory management is to make decisions regarding the appropriate level of inventory. In practice, all inventories cannot be controlled with equal attention. The most widespread used inventory system is the ABC classification system, but the limitation of the ABC control system is that only one criterion is considered. The purpose of this paper is to propose a new inventory control approach called ABC-fuzzy classification (ABC-FC), which can handle variables with either nominal or non-nominal attribute, incorporate manager's experience, judgment into inventory classification, and can be implemented easily. Our ABC-FC approach is implemented based on the data of the Keelung Port. The results of our study show that 59 items are identified as very important group, 69 items as important group, and the remaining 64 items as unimportant group. By comparing the results of ABC-FC with the original data, we find that our ABC-FC analysis shows a high accuracy of classification. Some concluding remarks and suggestions for inventory control are also provided. (C) 2008 Elsevier Ltd. All rights reserved.